A sale of business transaction involves significant preparation, negotiation and collection of information, regardless of the size and nature of the business being sold. However, additional steps and requirements may be required depending on the type of business and its scale. Allowing plenty of time to prepare for the sale is recommended to vendors and their representatives to ensure such transactions run smoothly and with minimal delays or disputes.
The core steps and considerations involved in a sale of business transaction are:-
The Sale of Business Agreement, confirms the key terms of the sale, including purchase price and assets to be included, as well as any conditions either party must satisfy prior to the finalisation of the sale. Often a draft contract is provided to a prospective purchaser and the parties will negotiate its terms.
Due Diligence is the investigation into the business carried out by the purchaser prior to buying the business. Subject to the contract terms, it can happen before the contract is entered into or as a condition of the contract.
Entering into the Contract
Once the sale of business terms have been agreed, each party will sign the Sale of Business Agreement and the purchaser will pay the deposit as agreed however usually 10% of the purchase price. Contracts are then exchanged which contractually binds the parties.
Post exchange and Pre-settlement
Following exchange of contracts and prior to settlement, the parties will need arrange for transactional steps to be undertaken such as:-
- transfer of the intellectual property,
- transfer of lease;
- release of securities on the PPSR;
- transfer of utilities;
- calculation of stock value
- transfer of contracts; and
- transfer of employees.
Once all prerequisites under the Contract have been satisfied or waived. the balance of the purchase price is paid to the vendor subject to any adjustments that are required under the contract.
If you require any assistance in arranging the sale of your business, please contact our team of Lawyers at The Quinn Group on (02) 9223 9166 or submit an online enquiry.