Buying or Selling Business in Victoria

When buying or selling a business, taking due diligence helps you identify potential risks and liabilities associated with the business. This process includes reviewing financial statements, contracts, employee agreements, consent from the landlord of the premises, the trial period, any debts of the business, registration, licencing requirements and any pending litigation. By conducting due diligence, you can make an informed decision, avoid unexpected surprises, and negotiate a fair purchase price.

What Should Be Included in a Business Sale Agreement?

A business sale agreement should clearly outline the terms and conditions of the sale, including but not limited to:

  • Purchase Price: The agreed-upon price for the business.
  • Payment Terms: How and when the payment will be made.
  • Assets Included: A detailed list of the assets being transferred, such as inventory, equipment, intellectual property, and customer lists.
  • Warranties and Representations: Statements made by the seller about the condition and status of the business.
  • Non-Compete Clauses: Provisions that prevent the seller from starting a competing business for a specified period.
  • Conditions Precedent: Any conditions that must be met before the sale can be completed, such as obtaining necessary approvals.
  • Transition Support: Any agreed-upon assistance the seller will provide to ensure a smooth transition.

How Can a Lawyer Help in Selling a Business?

A lawyer can assist in selling a business by:

  • Preparing and Reviewing Documents: Drafting and reviewing the sale agreement and other legal documents to ensure they protect your interests.
  • Negotiating Terms: Helping you negotiate the best possible terms with the buyer.
  • Ensuring Compliance: Making sure the sale complies with all legal and regulatory requirements, including tax obligations and employee rights.
  • Handling Disputes: Representing you in any disputes that arise during the sale process.
  • Protecting Confidential Information: Drafting non-disclosure agreements (NDAs) to protect sensitive business information during negotiations.

What Are the Tax Implications of Selling a Business?

Selling a business can have significant tax implications, including:

  • Capital Gains Tax: You may be liable for capital gains tax on the profit made from the sale of the business.
  • GST (Goods and Services Tax): Depending on the structure of the sale, GST may be applicable to the transaction.
  • Stamp Duty: In some cases, stamp duty may be payable on the transfer of certain assets.
  • Employee Entitlements: You may need to pay out or transfer employee entitlements, which can have tax consequences.

We collaborate with an accountant to help you understand your unique circumstances and provide you with appropriate advice.

The Benefit of Seeking Legal Advice Before Signing a Contract

Not using a lawyer in a business sale can expose you to several risks, including:

  • Unfavourable Terms: You may agree to terms that are not in your best interest or that leave you exposed to future liabilities.
  • Legal Non-Compliance: You might inadvertently violate laws or regulations, leading to fines or legal action.
  • Incomplete Due Diligence: Without a lawyer, you may miss critical issues during due diligence, such as undisclosed debts or pending lawsuits.
  • Disputes: You could face disputes over the sale terms, assets, or representations, which could lead to costly litigation. Without proper legal and tax advice, you may incur avoidable tax liabilities.

We help to mitigate these risks, ensuring the transaction is legally sound and in your best interest. Contact us or schedule an appointment with our lawyer for all your business purchasing and sales.

How will a business be treated in the event of separation or divorce? If you would like more information about property settlements in family law. Email [email protected] or call 03 8589 2762 or book your appointment with our family lawyer Thirumalai (Shelvi).