Sale and Purchase of Business
Are you looking to buy or sell a business in Adelaide or South Australia?
Everyone in business at some stage will look to buy or sell their business at some stage.
The sale and purchase of a business, whether it is set up as a sole trader, partnership, company or trust, can often be more complicated and risky than selling or purchasing a house or commercial property.
A sale of business must be properly documented: don’t do it yourselfIt is not possible to sell or purchase a business in South Australia, no matter how small, without some legal documentation in place.
Depending on the structure and size of the business, the type of documentation that may be required to properly transfer a business will vary. It is not just as simple as lodging a change of proprietor of business form with the Office of Consumer and Business Affairs in Adelaide.
The sale of a small business, where the sale price is not more than $300,000, is regulated under the South Australian legislation called the Land and Business (Sale and Conveyancing) Act 1994.
Vendor’s statutory obligationsIf you are the vendor of a small business in Adelaide or South Australia, you will be legally obliged to provide the purchaser with a Vendor’s Statement, called a Form 2. It is therefore critical that you have a Business Sale Agreement prepared, legally.
If the price of the business is more than $300,000, a Form 2 is not legally required but clearly the stakes are much higher and the type of information and documentation needed to be exchanged between the vendor and the purchaser is far greater as part of the due diligence process.
To conduct a due diligence assessment of a business you will need to carefully review and consider:
- income statements
- records of accounts receivable and payable
- balance sheets and tax returns including business activity statements (last 3-5 years)
- profit and loss records for the last 3 years
- bank loans and lines or letters of credit
- minutes of director’s meetings/management meetings
- audit work paper files (if available)
- the seller’s claims about their business (e.g. their reasons for selling, the business’s reputation)
- privacy details (e.g. of employees, trading partners, customers)
- details about plant, equipment, fixtures, vehicles
- existing contracts with clients/staff
- partnership agreements
- guarantees and indemnities
- lease arrangements
There are many potential issues in buying and selling a businessBuying and selling a business may involve a number of legal issues, including:
How we can helpWe can assist you in dealing with all of these issues, and ensure that the sale and purchase of your business is smooth and trouble-free by ensuring all the appropriate checks and documentation are in place and that there are no outstanding issues at settlement.
What you must doIf you are buying or selling a business in Adelaide or South Australian generally, get on the phone and call us for some advice.
We can give look at the business sale agreement and other documents and give you some advice, or you can let us take care of the whole transaction for you.
Walking into or out of a business is not like entering into or leaving a job. Get our advice and assistance.