Buying or Selling a Business

Buying or selling a business can be a very time consuming, complicated and involved process. You really must do your research to identify what is available in the market, what you can afford and how you are going to finance your business.

Are you buying a business?

There a number of legal issues to consider when you are buying a business. First and most important is the price. Often when a business is being sold, the seller will inflate the price and you should verify that you are paying the correct amount. A rule of thumb is that you should not pay more that 1 year of earnings before interest and taxes on the business. There are a whole series of legal issues which you need to consider, when you buy or sell a business, you need to adjust for the wages of staff and their entitlements if you are planning to redeploy staff in the new business. You need to consider the income tax position of the business and its GST liabilities. You need to know if it is correctly licensed to operate in its industry and if there is any pending litigation against it. All of these things could have a very serious impact on the value of the business you are buying and it is essential that you obtain proper legal advice in relation to these issues.

Are you selling a business?

There are many obligations in relation to the sale of a business. Generally the seller of a business is responsible for the preparation of a contract. The contract has to be valid for the sale to be effective and has to accurately disclose certain information about the business to the purchaser. All of the inventory and equipment that the buyer is buying must be detailed, the tax position and financial details of the business must be given in some circumstances and sometimes, in a large business transfer a buyer will even ask for an audit of the business. At any rate, it is a very complicated affair and you need professional advice to guide you through this process. That is what we are here for.

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