5 things you need to know about Business Sale and Purchases
- Buying or selling a business is a significant life and business decision. It’s important that you protect your interests, either as a seller or purchaser, both before, during and after the transaction. Know what you’re buying, ensure the business sale and purchase agreement reflects this, and make sure the agreement is adhered to by all parties.
- The first area in which a business lawyer can assist when purchasing a business is with due diligence. This means investigating the business to check what you are really purchasing. Are you purchasing a business which the owner says has a large number of contracted clients? If so you need to have your lawyer check that those contracts are in place, and are not easily terminated.
- Both the seller and buyer need a lawyer to advise them on the sale of business agreement. Generally the seller’s lawyer will draft the sale of business agreement and the buyer’s lawyer will review the document. If necessary the lawyers can then assist with the negotiation process.
- Although there are many important clauses in a sale of business agreement, perhaps the most important ones relate to (i) what’s being included in the business sale, (ii) how much the business will be sold for, (iii) when the purchase monies will be payable, (iv) what protections are offered to the purchaser in the event that the business is not as successful as initial made out, and (v) non-compete clauses.
- A non-compete clause is important to protect your business purchase. You need to ensure that the seller cannot set up a new business, close to you, with a similar name, and try to take their old clients. Non-compete clauses can be considered in detail in court. A lawyer can assist you to draft a cascading non-compete clause that is more likely to be upheld and to protect you.
Commercial Law, Contract Law, Information Technology And Online Law, Intellectual Property, Capital Raising LawExperience:
Bank of America Merrill Lynch, Baker & McKenzie, Hogben Group
Employment, Franchises, Business And Commercial, LitigationExperience:
Clinch Neville Long, McCabes, Neville & Hourn
Business And Commercial, Contracts, Dispute Resolution And LitigationExperience:
Norton Rose, Australian Business Lawyers & Advisors, LOGOS Legal Services (London), DibbsBarker