One thing we know for sure is that there will always be someone wishing to sell and someone wishing to buy a business.
When it comes to buying, it is important to have considered all aspects before you’re ‘business owner ready’ and whilst that takes time and commitment, the ensuing benefits are significant.
What are your sectors of specific interest? (e.g. retail, wholesale, manufacturing, hospitality, agribusiness etc.)
What are your key skills/experience?
Have you approached a finance broker or finance provider to ascertain the availability of finance and therefore what level of investment you can make?
When you find the business that attracts your attention, a comprehensive appraisal of a business is undertaken to evaluate its commercial potential. For a purchaser, obtaining the necessary financial information and business advice to be comfortable with the financial viability of the business is critical, particularly if you are seeking to acquire finance and often using your personal assets as security.
What is the ideal structure for you to own the business in?
What licences, permits and statutory consents are required to operate the business?
Are there any other requirements that a purchaser must satisfy under competition and consumer laws?
Are documented processes, leases, licences, supply or employment contracts and other agreements in place?
Due Diligence (DD)
It is most common for a specific due diligence period to be included in a business sale contract, enabling the purchaser to secure the business whilst completing their DD, rather than miss the opportunity. Alternatively, a vendor and purchaser may enter into separate due diligence agreements before entering any business sale contract. This may be an additional cost, as it does involve engaging financial, legal and technical expertise. Understandably, the less the purchase price or value of the business, the less the level of due diligence enquiry and costs a Purchaser will want to spend.
Identifying and dealing with critical issues at the outset before a binding contract is entered into is often far cheaper with better prospects of an outcome, compared to commencing court proceedings or other forms of dispute resolution to enforce rights. Vendors and purchasers should at least identify their due diligence plan (even if it is limited to some basics) and a budget for executing it. An experienced accountant or business advisor can advise you.
For a confidential discussion on any aspect of buying or selling a business, contact Kent Aughey 0408 810 299.