Buying and Selling Businesses

Even for the commercially savvy, the sale or purchase of a business carries both opportunity and risk. Professional legal advice can assist in clarifying uncertainties, giving you the peace of mind to approach the sale confidently. At Coulter Legal, we will work through every step of the transaction with you, whether as a seller or buyer.

Our goal is to make the sale hassle-free and as beneficial to you as possible. Below is an outline of the process, including how we can assist to ensure you get the best outcome

What to consider when selling a business:

Step 1 – Preparation and Valuation

Preparing your business for sale involves gathering financial records, assessing assets, and determining the business’s fair market value.

• How we can help – We ensure your documents are in order and can help identify any legal issues that might impact the sale, as well as assist with organising records, evaluating contracts, and handling any regulatory or compliance issues, including licenses and permits, which could affect the valuation.

Step 2 – Negotiating the Contract Terms

The next step is to negotiate the sale terms. These terms cover everything from the sale price to post-sale involvement in the business.

• How we can help – We can draft and/or review the Letter of Intent (LOI) or Term Sheet to ensure it aligns with your best interests, whether you’re buying or selling. We also help with confidentiality agreements, ensuring sensitive information is protected, and negotiate terms on your behalf, including price, payment structure, and contingencies.

Step 3 – Due Diligence

During the due diligence phase, the buyer thoroughly reviews the business’s financial, legal, and operational records to verify its value and assess any risks.

• How we can help – For sellers, we can assist in organising all necessary legal documentation, facilitate secure access for the buyer’s team, and manage responses to inquiries. For purchasers, we can assist in identifying any red flags in contracts, leases, or debts that could complicate the sale and ensure full compliance with disclosure requirements of the seller.

Step 4 – Drafting the Sale Agreement

The terms of the sale need to be formalised in a legally binding sale agreement, which outlines all details of the transfer.

• How we can help – We draft or review the sale agreement, ensuring that every detail is accurate and in your best interest. We also handle clauses related to payment terms, asset transfer, warranties, indemnities, and post-sale obligations, ensuring your rights and interests are fully protected.

Step 5 – Finalising the Sale

Finalising the sale involves the payment of funds, transferring ownership, and completing any necessary filings or notifications to regulatory agencies.

• How we can help – We coordinate the closing process, ensure all sale documents are signed correctly, and verify that the payment is received as per the agreement. We also handle final filings, such as transferring licenses or notifying regulatory bodies, ensuring that the sale complies with all legal requirements.

Selling your business does not need to be a complicated process.

By seeking the advice of an expert you will be able to stay on top of every detail and make informed decisions at every point. So, get in touch with us today. We will make sure that you are fully supported and that you obtain the most out of the transaction.

What to consider when purchasing a business:

Taking an opportunity to understand the components which make up the business, along with doing your due diligence, can help prevent surprises down the track.

Should I operate the company in my own name or set up a company?

There are a number of options available to you when thinking about the entity through which you will operate the business.

You can operate a business as a sole trader, in a partnership, in a company or trust structure.  Consideration needs to be had to your own individual circumstances, as well as the type of business being purchased before a determination can be made as to how you should purchase the business.

Your lawyer can help you review your options for Business Structuring and liaise with you and your financial advisor to assist you to make an informed choice about the best entity in which to purchase the business.  Your lawyer can also assist in setting up trusts or companies if required.

What documents are required for a sale or purchase of a business?

The documents required for the sale or purchase of a business vary depending on the transaction taking place, and the type of business being transferred.

Ordinarily, there will be a sale of business agreement, which sets out the main provisions of the agreement between the parties, including details of what is being sold, the purchase price, the settlement date, as well as provisions including warranties and guarantees, and any other conditions.  If you are a vendor, often your solicitor will have a preferred form of sale of business agreement which they will prepare.

Where there is a lease, a transfer of lease will also need to be prepared.  If you are purchasing the freehold there will be a Contract of Sale and Vendor’s Statement for the freehold property which is likely to be separate but contingent upon the sale of business agreement being completed.

There are also a number of other documents which may need to be prepared and signed by the parties to the transaction prior to settlement taking place, including:

Finally, there may need to be other documents to be obtained by the parties to a transaction or matters dealt with prior to settlement taking place.  This may include things like obtaining a mortgagee’s consent to the transfer of lease, or a PPSR release for a security held over assets of the business which are to be transferred.

Who prepares these documents?

Ordinarily, the vendor or their representative will prepare most of the documentation for the sale, including the sale of business agreement.  These will then be reviewed by the purchaser and/or their legal representative.

The Purchaser, or the landlord, will also ordinarily prepare the transfer of lease documents.  Usually, it is the Vendor who will be liable for the Landlord’s cost of consenting to the transfer of Lease.

In some circumstances, it may be beneficial for the purchaser to prepare documents for the transaction, for signature by both parties, particularly where that document requires the purchaser to provide the majority of the information and details.  This includes, for example, in the case of an application for the transfer of a liquor licence.

At what stage of the process should I speak to a lawyer?

Ideally, you should get in contact with your lawyer as early as possible, when you are considering buying or selling a business.  It is important to seek legal advice prior to entering into any binding agreement or signing heads of agreement in relation to a sale.

Often, parties will only approach their lawyers after the deal has been done, requesting the lawyer prepare the relevant documents.  This can often lead to unexpected delays, particularly where your legal representative may not have all the relevant documentation, or may raise issues that were not discussed between the parties when the deal was negotiated.

For a vendor, where your lawyer is involved from the beginning they have the opportunity to discuss the sale with you, advise you what documentation and information they will need to prepare the relevant documents, advise you on any important matters you need to discuss with the purchaser and help you negotiate the sale (if you require them to do so).  This will also mean they will be in a position to provide the sale of business agreement as soon as the deal is agreed, as they have had time to prepare.

For a purchaser, getting your legal representative involved as early as possible is also beneficial.  Your legal representative can assist you to undertake relevant searches of the business and the premises prior to the deal being finalised and can review heads of agreement and a sale of business agreement prior to it being signed.

Even if you do not want your lawyer’s assistance in the negotiation stage, giving them notice of the impending sale or purchase will enable them to be prepared to assist you when and where required.

Once a deal is done, it is very important that it be correctly documented, through a sale of business agreement.

How can Coulter Legal help?

As detailed above, there is a lot to think about when buying or selling a business.  We are able to guide you through the process of buying or selling a business, step by step, assisting you from the early stages of negotiation to the settlement and finalisation of the sale.

We aim to help to streamline the transaction so you can get down to business sooner.