Buying a business is a complicated process.
It pays to talk to experienced commercial lawyers like us early on. This is so that you are clear about the issues and the process ahead of you.
There are quite a few things that you need to consider when buying your first business.
These will involve liaising with your lawyer, business broker, accountant and bank manager who will all help guide you through the process.
Your business broker will provide you with a Heads of Agreement document once the details of the purchase are agreed upon.
This outlines the main issues you have agreed regarding the purchase. The Vendor will then ask their solicitor to draw up the actual contract that will govern the process from hereon.
The contract is not a take it or leave it document. It should be treated as a working draft of ultimately will be the deal between the vendor and the purchaser (you).
This doesn’t mean that you can renegotiate every part of the deal again, otherwise the Vendor will say quite rightly that you are not conducting the matter in good faith.
Instead it is the nuts and bolts of how the matter will progress that will be defined in detail in the contract.
Buying A Business – Things That Matter
The following things matter in a contract;
- The completion date (settlement or handover money and get the keys date) – preferably about 28 days. This is so all parties have enough time to get everything they need together.
- Are you happy with the existing lease? Do you want to negotiate a new one?
- A full list of communication mechanisms that form part of the sale. For example the phone, facsimile, domain name, email addresses, social media handles etc.
- Restraint time and distance are important aspects that impact on you and the Vendor. They impact you in that you are buying the goodwill of the business. You don’t need the vendor setting up again down the road taking with it the custom you just paid for.
- The training period is also an important issue – how long do you need. Also do you need some before you take over.
- The trading stock maximum price is also an important issue in businesses that trade and carry a lot of stock. You need to decide on a limit so that it is clear what stock that will be allowed, needed and paid by you.
As I said before you will need the help of good commercial lawyers (like us) to advise you early on.
Call us now to discuss the business you want to buy.