Preparing a Business for Sale
Legally a Business is simply a collection of assets
When preparing a Business for sale there are a number of initial matters which need to be determined to ensure that the sale can be properly and effectively documented. Legally a Business is simply a collection of assets and it is vital for each asset to be properly identified and for it to be determined who owns that asset.
Small Business which has been conducted for many years may actually have different legal owners particularly where a family company or discretionary trust is involved. These are some of the questions we would ask a potential Vendor to understand the nature of the Business:
- What is the Business known as? Is the Business name registered? Who is the owner of the Business name?
- Does the Business have a website, Domain names or email addresses? Who was the applicant for those names and who pays any maintenance or upkeep fees?
- Are there Business premises? Is there a Lease? Who is the Lessee?
- Is the Business registered for GST?
- What is the ABN of the Business? Who is registered as the holder of the ABN?
- Who is the Tax Payer? Request copy of Tax Returns for the Business. Is a depreciation schedule attached?
- Request copies of Supply Agreements, Employment Agreements and the like. Who, on behalf of the Business, is a party to those Agreements?
- Is there any Intellectual Property which is registered? Who is the registered owner?
While not meant to be comprehensive the above list will draw out whether, over the years, different aspects of the Business are being dealt with by different owners. This may not be an oversight as it is quite usual for Intellectual Property to be held by a non-trading entity. Discretionary trusts are commonly used for certain aspects of the Business and not others.
Any oversights can be rectified at the time of preparation of the Contract.
Please contact Lewis Webb or Dennis Grogan to discuss any aspect of preparing a Business for sale.
© 2014 Grogan & Webb