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Business Sale and Purchase

Buying or selling a business or company, or merging with another business, can be a complex journey. A business sale or purchase will likely involve:

  • investigating the risks and liabilities of the target business or company;
  • negotiating commercial terms with the other party to the transaction;
  • arguing over warranties and indemnities;
  • obtaining third-party consents and licences, particularly for intellectual property;
  • managing employee entitlements; and
  • releasing security interests.

As a result, there are many strategic, commercial and legal issues at play. Additionally, there is usually a lot riding on M&A deals, including people’s jobs and the futures of the business and business owners alike. Hence, a transaction can be an overwhelming experience, with tense negotiations and time sensitivity.

LegalVision’s experienced lawyers provide efficient and cost-effective guidance on every step of the transaction adventure. From negotiating the term sheet, helping you through due diligence, providing advice on structuring, drafting the sale agreement and attending to all the steps needed to complete the transaction, LegalVision makes sure that you’ll close the deal with your rights protected and commercial goals achieved.

We are experts in assisting founders, small-to-medium sized and venture funds across a range of industries to realise their exit or expansion dreams.

We work collaboratively with our client’s tax and commercial advisors, and our strategic M&A assistance is bolstered by specialist legal advice from our internal Employment Law, Property Law and Intellectual Property Law teams.

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5 things you need to know about Business Sale and Purchase

  1. Buying or selling a business is a significant decision. Whether you are a seller (a “vendor”) or a buyer (a “purchaser”), it is important that you protect your interests before, during and after a transaction.
  2. One of the first steps in the business purchase journey is due diligence. Due diligence is the process of investigating the business, business assets and its operations to give you more information about what you are purchasing. A business lawyer can assist during the due diligence phase of a business purchase. For instance, if you are purchasing a business that has many clients, you will need a business lawyer to check that contracts are in place with each customer and that those contracts cannot easily be terminated.
  3. In general, the vendor will be responsible for preparing a sale of business agreement. The purchaser will then review the agreement and suggest amendments. After that, the parties will negotiate until they reach an agreement that suits both of them. It is a good idea to use a specialist business lawyer to help you with drafting, reviewing and negotiating the sale of business agreement.
  4. For the sale of smaller businesses, it is common to use a standard form sale of business contract. However, many buyers and sellers add special conditions to the contract that set out particular terms for their transaction. If you are selling a more complex or higher-value business, your lawyer might prepare a bespoke contract. The key terms in a sale of business agreement cover: (i) the subject matter of the transaction (what business assets are included in the sale); (ii) the purchase price; (iii) when the buyer will need to pay the seller; (iv) what liabilities each party will take on and what protections will apply if the business is not a success after the deal is finished; and (v) non-compete obligations.
  5. A non-compete clause is a contractual term that has the effect of limiting the commercial activities of a person or business. In the context of a business sale, a buyer will want to ensure that the seller cannot set up a new business to compete with the old business after the sale has been finalised. To be enforceable, a non-compete clause must be reasonable to protect the interests of the buyer. Hence, it is a good idea to seek legal advice to draft a clause that strikes the right balance for your transaction.

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