If you are planning on buying or selling a business, we can help.
The process of buying or selling a business can be rewarding for both the buyer and the seller of the business. On the flip side, there are a number of important considerations, many of which can have significant legal repercussions. We can provide advice and assistance to you through this process, to minimise any adverse consequences and accentuate the likelihood of a positive outcome.
One of the documents you should seek legal advice in relation to is the sale of business contract, which outlines the terms of the agreement between the seller and buyer of the business. We can assist with drafting or reviewing this document.
This contract should canvas various considerations. Below are examples of terms which should be covered in the contract.
- The purchase price and terms of payment from the purchaser (buyer) to the vendor and conditions relating to finance;
- The assets which will be sold, including client information, intellectual property, and proprietary information;
- How confidential information shared between the parties is to be treated;
- Considerations relating to the lease of buildings;
- Restraints of trade to be imposed upon the vendor;
- How disputes between the parties are to be addressed (for example, via mediation or arbitration in the first instance or otherwise);
- Whether the employees will be employed by the purchaser of the business and payment of accrued employee entitlements.
There may be other issues that you will also need to consider. For example, for buyers, the type of business structure that would be suitable for the new business might be a relevant concern. Other agreements, such as lease agreements (for property and other income-producing assets), software licenses, and security interests, might also be impacted by the sale and purchase of a business.
For financial services and credit licensees, rights and obligations relating to authorised representative agreements might be impacted and can be particularly important. For example, a change in control or sale of a licensee’s business is sometimes a trigger for terminating an authorised representative agreement.
Due diligence for financial services businesses being purchased or sold
If you are buying or selling a financial services business, we can assist you with undertaking due diligence or preparing your business for a smooth sale.
For example, we have undertaken
licensee compliance reviews to provide purchasers with confidence that the compliance arrangements of the business intended to be purchased are up to scratch (or at the very least, are buying the businesses with eyes open to the risks involved). These reviews also identify strengths and shortcomings of the business, in relation to compliance and also more broadly. For example, a review will typically discuss corporate governance arrangements and how the licensee implements its risk management policies.
If you are considering selling your business, a licensee compliance review can also give more certainty to the prospective purchaser and enable you to negotiate more beneficial sale terms. If you are considering selling your business in the future, reviews of this nature can help you to groom your business for a more favourable sale.
We can also investigate certain key areas that you should be interested in. These include:
- Whether you will be able to continue satisfying the requirements of the AFSL. For example, whether the business being purchased will be able to maintain competence to provide services if certain people depart from the business.
- Whether any important AFSL conditions would be breached as a result of the arrangement, particularly key person conditions.
If you are thinking of buying or selling your business, please contact us to discuss how we can help.
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