Legal Advice When Buying A Business
If you are considering buying an established business there are many issues that you must consider. Berryman Partners can assist you every step of the way.
Type of Business Structure
Careful consideration should be given to how you wish to own and operate the business. Examples of different structures include sole trader, partnership, franchise, company or even a trust. The choice you make can have ongoing implications for you and your business. For more information about the different types of business models available see our Business Structure page.
Every business has different commercial goals and expectations. We understand this and we will help you to choose the model that is most appropriate for you based on factors such as tax planning, asset protection, ongoing cost and finance availability. We can liaise with your accountant or financial planner to provide you with a professional, personalised service.
The Contract/Agreement for Sale
In an business sale transaction, the vendor (seller) will have their solicitor prepare the Contract for Sale of Business. This document contains the terms of the sale as well as details of the business equipment and assets. We will negotiate with the vendor to ensure that your interests are protected. We will also review the contract and explain the effect of the terms so that you the purchaser are in a position of understanding and feel comfortable with the sale.
The Business Premises
The next important decision you need to make is how you wish to acquire the business premises. The options available to you are:
- Leasing the premises – this may involve the creation of a new lease or the assignment of an existing one.
- License to occupy.
- Purchasing the premises.
Each of these options carries different rights and responsibilities. The option that is most suitable for you may depend on such factors as availability of finance or your investment goals. We will listen to you and assist you to make the right decision for your business.
Buying a business gives rise to various other matters which require your consideration and which can have serious implications for your business. We aim to provide a complete service and, as always, we are available to advise and assist you in the decisions which you have to make.
Here are some questions that any prospective purchaser should ask themself:
- Do you need to consider restricting the vendor in their trading activities if they’re going to be in direct competition with the business you are intending on purchasing. We can negotiate with the vendor to include a Restraint of Trade in the purchase agreement.
- What do you intend to do with the current employees of the business? Will their existing employment agreements affect your purchase?
- How do you intend to obtain finance to purchase the business? Berryman Partners can advise you on the terms of a loan agreement and we will liaise with your lender if needed.
- What are the existing assets and liabilities of the business? Have any creditors of the business commenced legal proceedings against the current owner?
- Are there regular customers of the business? How do you intend to secure their custom. This may involve a review of contracts for current and future work. We can negotiate to include a requirement that the vendor introduces you to regular customers to maintain the commercial relationship.