Buying an established business can have a number of advantages. The business could have a proven history of profitability, existing clientele, marketing, and functioning workplace procedures. But there can be pitfalls if you don’t do your research early in the buying stage.
If you’re looking to purchase an existing business you’ll need to carefully consider some of the following points;
The Vendor – does the person selling the business have the right to sell it and why is the business being sold?
Licencing – different businesses have different statutory licencing requirements that must be complied with for operations to continue – are they up to date?
Business history – is there an existing client list that will stay when the business changes hands, who are the current suppliers etc.
Costs – what are the existing costs and obligations of the business, ongoing bills, staff costs (future pay increases), repairs, existing debts etc.
Assets – many businesses will have equipment pertinent to the continued operation of the business.
Purchase agreement – the purchase agreement stipulates what you are purchasing, what you have a right to, and what costs do or do not carry over to you.
Taxes – there are a number of taxes in Australian business law that can apply to the acquisition of a business – GST, capital gains tax, stamp duty etc.
There are a number of other considerations to make, such as whether you’ll buy the business as a sole trader, company or a partnership, and whether or not to change the business name.
Buying an existing business can be a huge responsibility and a financial liability. There are so many things you need to consider, but if you have a good commercial lawyer to advise you on these initial points you’ll be off to a great start.
Adams Wilson Business Lawyers
The commercial lawyers at Adams Wilson have hands on, practical experience in all areas of purchasing an established business. We’ll provide sound advice to best suit your interests as we perform all the necessary title searches, licencing checks, and negotiation of the purchase agreement.
If you’re considering buying an existing business you can speak to or email one of our skilled commercial lawyers to discuss what you want from your acquisition.
Please call 1300 253 203 or send an enquiry using the form to the right. You can also read our article on selling a business.