Business and commercial
Buying or selling a business in Western Australia
The sale contract is only one part of a business transaction. Value may depend on the lease, licences, employees, intellectual property, equipment, stock, restraints, finance and the accuracy of information supplied before settlement.
Conflict clearance and written engagement are required before the firm acts.Quick answer
What should you check before buying or selling a business in Western Australia?
The sale contract is only one part of a business transaction. Value can depend on the lease, licences, employees, intellectual property, equipment, stock, restraints, finance and the accuracy of the information supplied. Decide the purchasing entity and complete due diligence before signing, and confirm the lease can be assigned or re-granted.
- The sale contract is only one part of the transaction.
- Lease assignment or a new lease is often essential to the value.
- Asset and share purchases carry different risk and tax consequences.
- Due diligence reviews finances, contracts, licences and employees before you commit.
- Restraints of trade may limit the seller from competing, if properly drafted.
Jurisdiction: Western Australia.
If you are buying
- Identify exactly what is being purchased.
- Review financial and operational information with appropriate advisers.
- Confirm lease assignment or a new lease.
- Check licences, employees, equipment and key contracts.
- Make required conditions clear and measurable.
- Decide the purchasing entity before signing.
If you are selling
- Prepare complete and accurate sale information.
- Confirm authority to sell the assets or shares.
- Address landlord, financier, employee and licensing requirements.
- Define stock, adjustments, training and handover.
- Protect confidential information during negotiations.
COMMON QUESTIONS
Frequently asked questions
Should I buy the assets or the shares?+
Asset and share purchases have different risk, tax and contractual consequences. The right structure depends on the business, liabilities and advice from your lawyer and accountant.
Why does the lease matter so much?+
For many businesses the premises are essential. If the lease cannot be assigned or a new lease obtained on workable terms, the value of the business can change significantly.
What is due diligence?+
Due diligence is the structured review of the business's finances, contracts, licences, employees and risks before you commit, so conditions and price reflect what you are actually buying.
Do restraints of trade apply?+
Sale contracts often include restraints preventing the seller from competing. Their enforceability depends on how they are drafted and the circumstances.