Tegan Milne – Solicitor
Commercial and Succession Planning
The below 5 steps are only a few of the steps we recommend you take when getting ready to buy a business.
- Understand how the business is performing – your Accountant will be integral in helping you understand the business financials, however it is important that you also visit the business during regular operating hours and complete a visual assessment of the business’ performance. For example, is the number of hours being worked by the owner reflected correctly in the financials? Is customer foot traffic consistent with the reported revenue?
- Do your Due Diligence – it is important to gather as much information as you can about the business before you sign the contract. As well as conducting financial due diligence with your accountant, you should make contact with your legal representative to make sure the business has the correct licences and permits in place to operate as well as a lease for the business premises.
- Evaluate what is actually included in the sale – take the time to understand how the business works and make sure you are receiving all material items to continue the business. This can include plant and equipment, key employees, rights to intellectual property, the business name and key contracts.
- Make an offer – once you have completed your financial and legal due diligence on the business, you need to decide if you want to make an offer to purchase the business. To buy a business at a fair price, you may want to engage an independent valuer. Your offer will also depend on your financial capacity, and so if you are relying on finance, we recommend that you make contact with your lender to confirm your financial capacity before putting an offer forward.
- Contact your lawyer – has your offer been accepted? Great! Before you sign a contract or heads of agreement, make sure you contact your legal representative. Your legal representative will want to make sure the terms of the agreement reflect what you have negotiated and your understanding of the transaction before you are committed.
If you would like further information on the above steps, or would like assistance putting together a purchase offer, get in touch with us today on 03 5445 3333