Purchase of Business Advisory

Our lawyers have years of experience undertaking complex purchaser due diligence analysis. Our experts will assist you in identifying any potential risks and help you negotiate terms within the contract of sale to get the appropriate indemnities from the Vendors to protect you from any risks associated with the purchase of shares. In asset purchasers, we extend our assistance and expertise to keep you informed of the potential benefits and pitfalls.

Business registration

Helping you make investments with confidence

Buying a business can be a prudent investment to grow your asset portfolio. Businesses of all sizes and complexities are available for purchase throughout Australia, with various legal implications attached depending on the type of business. As a purchaser, it is crucial that you understand the industry of the business you are purchasing and conduct thorough due diligence of the financials obtained from the vendor.  

Once you are satisfied of the business you are seeking to buy into, you have the following options as a manner of purchase:

  1. Partial share purchase  

  1. Partial asset purchase  

  1. Complete share purchase  

  1. Complete asset purchase  

Thinking of buying a company?

Partial share purchase  

You may considering investing in a privately held company. In exchange for your investment, you will be allocated an agreed amount of shares. Alternatively, you may be an employee of a company that has offered you the ability to buy into the partnership.  

In either of the above scenarios, it is important that you have a lawyer look at the potential liabilities owed by the company.  

A review of the share purchase agreement ensures that your investment is protected and that you are not liable for any liabilities incurred by the company prior to your interest being received.  

Complete share purchase  

If you are contemplating the purchase of the entire company from its current shareholders, it is important that you conduct extensive pre-purchase due diligence.  

It is important to note, that in purchasing shares of an existing company you will be liable for all the obligations that the company has accrued over its years of trading. It is also noteworthy that all the current employees will now be your responsibility. You must properly check the statement of accounts to identify the accrued liabilities to employees and other suppliers to the company. You must be satisfied that there is no pending disputes, investigations, or litigation against the company.  

While it is easier to simply transfer shares from the current owners to yourself, buying shares of a company comes with a myriad of risks.  

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Buying corporate assets and need help? 

Buying assets of a company is a primary strategy in business establishment or expansion. If you are looking to get into an industry and don’t want to spend the time building a business from scratch buying an established business could be a great investment. It allows for you to take advantage of the cashflows prevalent in the current business and focus on optimising the operations. Alternatively, you may be an established business looking to integrate vertically or horizontally by buying another business.  

The unique advantage of buying a business asset is that you are also able to purchase the expertise, client lists and intellectual property that comes with the business.  

At SettleHub our lawyers are experts at helping you establish business structures that optimise your proposed acquisition. Our lawyers provide the following services: 

  1. Pre-purchase due diligence  

  1. Contract negotiation with the Vendor  

  1. Assistance with terminating employees of the Vendor and rehiring critical staff 

  1. Providing advice on how to adjust the entitlements of the staff and other outgoings payable by the Vendor   

  1. Developing employment contracts for the re-hired staff and/or new staff 

  1. Assistance with obtaining landlord consent for the transfer of lease at the premises the business is operating 

  1. Assistance with transferring all licences and intellectual property from the Vendor to the purchaser  

FAQs on Business purchase

  • Goodwill includes the brand name of the company. It is a value assigned to all intangible components of what makes the business successful. 

  • It is important to identify all licences necessary to operate in an industry.  

  • It is crucial during the due-diligence stage to recognise if the licences are current and the procedure to transfer them. 

  • To facilitate a sale, businesses are often valued considering a series of factors such as the assets, brand image, customer scale and intellectual property. Businesses are valued at the net worth or at the rate of annual profit depending on the standard valuation mechanism in each industry.  

  • It is prudent to discuss the purchase price with a finance professional.  

  • In general terms it is safer to buy the business as you will not have to worry about any undisclosed liabilities from the previous company.  

  • However, in some instances this is not practical, and you would need to buy the company. In such circumstances it is important that you take all legal measures to be indemnified against any liabilities of the previous business.  

  • Transferring a lease will import all the obligations of the existing lease between the landlord and the Vendor to you.  

  • Agreeing to a new lease will allow you to negotiate your own terms with the landlord. However, landlords usually prefer to assign the lease they had with the Vendor to the purchaser.