TIDYING UP & CLOSING UP SHOP – SELLING YOUR BUSINESS
The Territory’s tough economic conditions have seen a number of businesses either shut down or change hands. For those looking to sell their business, we recommend you first undertake your own “due diligence” to collate all relevant information to your business and to “tidy up” where required. This exercise is useful to minimise any unnecessary or unexpected delays in the sale process and while it is more common in large scale transactions, the same principals and benefits apply to the sale of small and medium enterprises.
VENDOR DUE DILIGENCE
Once you make the decision to sell, you (or your representative) should start collating all of the relevant documents for the business, including:
- Financial reports & summaries;
- Asset register;
- Lease documents (including any disclosure statements);
- Contracts of sale and other sale documents (eg. if the business owns any land);
- Licence documents (eg. liquor licence);
- Employee records; and
- Third party agreements (eg. supplier agreement, waste removal contract etc).
Unless your record keeping is meticulous, this step may take some time but prospective purchasers will be grateful to have access to a binder of information that is relevant to their decision on whether to (a) purchase the business and (b) what price to offer you. If you are concerned with disclosing sensitive and confidential information, your lawyer can prepare a Confidentiality Deed to protect the information that is being released to interested parties.
TIDYING UP
When collating your documents, it is a good opportunity for you to review and check if any additional steps are required to “tidy up”. For example, if your business is leasing a premises you should ensure you have an original copy of the lease, that the lease has been correctly executed and dated by all parties, it has been consented by any interested parties (eg. the landlord’s bank) and has been registered with the Northern Territory Land Titles Office.
BENEFITS TO YOUR SALE
The benefits of undertaking the above exercises include:
- The sale process will be significantly smoother as prospective purchasers will be provided with all relevant information at the start of the process;
- It reduces the risk (and costly exercise) of a purchaser withdrawing from the sale as they are provided with all information upfront and any issues can be identified before the sale process begins; and
- It is both time and cost effective for a Vendor as it will minimise doubling up on fielding queries from multiple parties over the same issue.
ENGAGE PROFESSIONALS
Once you have an interested buyer, you’re ready to go and your lawyer can prepare a Business Sale Agreement for their representative to review. Your lawyer can assist with any related transfers such as leases, liquor licence, domain names and business names. You should additionally seek advice from your accountant on the GST treatment of the sale, any capital gains tax implications and stamp duty.
ABOUT HWL EBSWORTH LAWYERS
HWL Ebsworth is a full service commercial law firm providing expert legal services at competitive rates, focusing on client outcomes. HWL Ebsworth is currently ranked as the largest legal partnership in Australia according to the most recent partnership surveys published by The Australian and the Australian Financial Review and comprises of over 1,305 staff across offices in nine national locations, 15 of those based in Darwin.
CONTACT US
HWL Ebsworth Lawyers assists businesses of all sizes with their commercial needs. For further information on this topic or to arrange a consultation with one of our lawyers, please contact:
NADIA D’SOUZA
ASSOCIATE, DARWIN
P +61 8 8943 0432
E [email protected]