Legal Disclaimer
This presentation is offered for general information
purposes only. It does not constitute specific legal
advice or opinion. You should not act or rely upon any
of the information contained within this seminar
without seeking the advice of a qualified solicitor who
specialises in the particular area of expertise and
jurisdiction that you require.
Presentation Outline
1. Undertake Due Diligence 4
2. Arrange Your Finance 6
3. Decide Your Purchasing Entity 9
4. Review The Contract 12
5. Undertake A Legal Due Diligence 15
6. After Completion 19
Contact Us 22
Slide #
1. Undertake Due Diligence
As a purchaser, you should conduct an initial
assessment of the business to satisfy yourself
that it is a viable purchase.
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1. Undertake Due Diligence
This typically involves an evaluation of the sales,
profits, assets, financial records, overheads, salary
for the owner, stock availability and key personnel.
If required, we can recommend suitably trained
people who can assist you with this assessment.
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2. Arrange Your Finance
You need to ensure that you have sufficient
funds to fund the purchase.
You will need to factor in Stamp Duty and unless
you are purchasing a "going concern" business,
GST.
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2. Arrange Your Finance
If you need to borrow funds, your lender will
generally require security for the loan including a
Mortgage, Personal Property Security Registration
and Personal Guarantees by Directors of the
purchaser if the purchaser is a company.
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2. Arrange Your Finance
You should
ensure that
you are well
informed
about the
terms of any
Loan and the
obligations
that you are
taking on.
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3. Decide Your Purchasing Entity
A prudent purchaser will have regard for risk (e.g.
exposure of your assets to liability) and taxation
minimisation when deciding on the appropriate
entity to use to purchase the business.
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3. Decide Your Purchasing Entity
The usual options include sole trader, partnership,
company, or trust, or a combination of one or more
of these business structures.
When considering your options, we recommend
you start with the best option from a risk
management perspective.
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3. Decide Your Purchasing Entity
Your accountant
should then
assess its
effectiveness
from a tax
minimisation
perspective... and
adjustments to
the structure can
be made as
required.
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4. Review The Contract
Before signing the
purchase Contract,
you should
understand what it is
the Vendor is selling
so that you can
assess whether it
complies with your
understanding of
what you are buying.
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4. Review The Contract
If you require
additional terms to
be inserted into the
Contract, or terms
that are in the
Contract to be
deleted or amended,
the time to attend to
same is BEFORE
you sign the
Contract.
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4. Review The Contract
After the exchange of the
signed Contracts
between the parties, both
parties will be committed
to the sale and will need
to complete all of the
things necessary to
perform their respective
obligations under the
Contract by the
designated completion
date.
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5. Undertake a Legal Due
Diligence Either Pre or Post Exchange
Due diligence is the process by which the
prospective purchaser of a business investigates
what is being bought to make sure that it is what
the seller has represented it to be.
During a due diligence is when you want to
uncover any "skeletons in the closet", not after
purchase completion.
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5. Undertake a Legal Due
Diligence Either Pre or Post Exchange
A due diligence may take
place before or after
exchange of contracts.
You may choose to
undertake the due
diligence after exchange
of contracts if you are
concerned about locking
the seller into a sale.
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5. Undertake a Legal Due
Diligence Either Pre or Post Exchange
Due diligence that takes
place between
exchange and
completion is a more
traditional approach
however, if time permits,
a pre-exchange legal
due diligence is the
preferred option,
because you are not
bound by a contract.
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5. Undertake a Legal Due
Diligence Either Pre or Post Exchange
The extent of legal due diligence is generally
governed by three factors:
1. Your understanding of the business
to be purchased;
2. The time available to conduct the
due diligence;
3. Your budget for the due diligence.
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6. After Completion
After completion there will still be a few things that
must be attended to.
This may include:
1. Paying Stamp Duty;
2. Registering the business name; and
3. Lodging any Commercial
Lease documents required to be
registered etc.
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6. After Completion
As you are now running a new business, you
should also consider:
1. Whether you need to register for GST
and/or require licences to operate the
business;
2. Protecting your intellectual property;
3. Understanding your taxation and legal
obligations;
4. Public liability;
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6. After Completion
4. Arranging the relevant insurances
including workers compensation;
5. Professional indemnity and
income/accident protection;
6. Accessing funds to see you through
quiet cash flow periods (e.g. an overdraft
facility); and
7. Obtaining assistance and training from a
qualified business advisor etc.(this list is not exhaustive)
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Turnbull Hill Lawyers – Contact Us
If you have any further questions about this topic or
you'd like to discuss a related matter, please
contact our Business Law Team.
We will endeavour to respond to your enquiry
within 24 hours.
Need Business Lawyers in NSW? Call Us
We service Newcastle, Sydney & the Central Coast
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