Just as when buying a house, if you buy a business there is conveyancing to be done if you are also buying the property the business is situated on. However, this is not always the case; in fact it is more likely that you will be purchasing a business – the rights, responsibilities and assets – and taking over the lease for the premises rather than buying an actual building or real estate. In either case it is essential to have a commercial lawyer look over all the contracts and ensure they are all in order.
When there is real estate such as land and buildings involved in buying the business it becomes a more complicated process because all the assets, rights and responsibilities are purchased along with the property. This means conveyancing is needed to transfer the land title into your name as well as the other components.
Sometimes, buying a business is fairly straightforward, but it can easily be a complex business that drags on for ages. Much depends on whether the purchaser is satisfied with the price and inclusions. If a lot of negotiations have to be done it takes time for the commercial lawyers to go through everything, add in the needed clauses then have the sellers lawyer get the approval of the seller. Other legal matters that must be seen to are as follows: –
- Sale of business contract prepared
- The lease has to be assigned and transferred
- The lease must be registered and adherence to compulsory requirements ensured
- Commercial and/or lending agreements may be needed
- Protection of commercial assets
- The business trademark, name, licenses, goodwill and patents transferred
- Conveyancing to transfer ownership of building/property if applicable
- Fixed assets, stock and equipment of the business must be listed and ownership transferred
- Employment contracts if there are employees
- Supplier agreements and invoices or orders that are current
- The financial structure including taxation information and debtors of the business.
It is impossible to tell for sure just how long the business will take to sell, but once the buyer comes along a time for settlement is usually agreed on between buyer and seller. Mostly, this time is 30, 60 or 90 days. This gives each person’s lawyers time to draw up contracts, examine the lease and do all of the above that is needed. If more time is needed, the buyer and seller much both agree to it.
The seller can speed up the process by getting their business organised before they even put it on the market. Selling off old stock and collecting outstanding debts are two things that should be done, along with obtaining audited financial statements for the last three years.