Buying or selling businesses and companies, including business assets
Buying or Selling a Business
If you are selling or purchasing a business, or only some of its assets, or if you are selling or purchasing shares in a company, either partially or entirely, we can help you with the process from start to finish.
Whether your transaction is large or small or involves the sale or purchase of assets, shares or a combination of both, our experienced Sydney business lawyers can advise and guide you through the entire process including due diligence through to and including completion.
Whether you are purchasing or selling a business or a company, there are a number of considerations, and we can help you with:
- What is being sold or purchased?
- Business as a whole, including its goodwill and assets
- Some of the assets of the business
- Company as a whole, being a 100% shareholding in the company
- Some of the shares in the company
We can assist you with any of these business transactions. Purchasing or selling a business can be a life changing event. As such, it is comforting to know that all legal aspects of the transaction are able to be handled by skilled and experienced legal professionals who will act with your best interests in mind at all times. We recommend you contact our Sydney business lawyers as early as possible in the sale or purchase process to ensure that we are able to fully assist you with this important life event.
For more information, check out this article written by our experienced commercial team to help guide your proposed transaction.
Undertaking Due Diligence
Due Diligence in an integral part of any business transaction, particularly where you are the purchaser. Due diligence is a process of conducting investigations whereby a purchaser minimises their risks of acquiring a business or a company that may not be viable. Due diligence generally involves:
- verifying the banking and financial position of the business or the company and the value of the business or the company;
- reviewing the material contracts associated with the business(es), including lease(s) or ownership of premises (if any);
- verifying the corporate ownership structure, ownership of business assets, including IT and intellectual property rights;
- verifying the employees and suppliers of the business or the company, including by communicating with them;
- investigating any legal proceedings commenced by and against the company or in relation to the business; and
- compliance with regulatory requirements, including environmental issues (if any).
In all of the above matters, the seller must reasonably cooperate with the purchaser to provide requested information in order for the purchaser to carry out their due diligence investigations.
As part of the due diligence process, consider the following:
What relevant aspects should I be looking out for?
You should be looking out for things such as the business operation and its model, the legal structure, making sure you obtain independent financial advice about the business’ financial success and many others!
When should I do my due diligence?
You should be doing your due diligence after you and the seller have negotiated contract terms, but prior to signing the sale of business contract.
Can a lawyer help me with my due diligence?
Yes. Our commercial law team can guide you throughout your entire transaction, especially with the business’ legal interests. However, please remember we cannot provide you with financial advice.
What is Goodwill?
Goodwill of a business is a unique asset and a key consideration to ensure that the business is able to retain its existing customers and also attract new customers and in turn ensuring the continual optimisation of the business’ turnover and profits. When purchasing a business, the seller is selling, and the buyer is buying the following substantial assets of the business:
- Equipment; and
As the equipment and stock of the business are tangible assets, the only intangible asset is the business’ goodwill. Goodwill may comprise of the business name, intellectual property such as trademark and patents associated with the business, customer list or database (client books) or similar.
Our experienced commercial lawyers at Ivy Law Group have all the knowledge and tools to help you with your proposed capital raise venture as well as assisting you with working out which form of capital raise will work best for you and your business.
Types of Capital Raisings
Raising capital through debt – otherwise known as the bank (or friends and family). This common and familiar way of raising capital is known as debt capital. This essentially just means borrowing money.
Equity capital allows you to raise more capital than you might be able to through a loan or security. However, this kind of capital raise requires you to sell part of your business in return for the capital used to grow the business. Monies to raise equity capital most often come from what is known as angel investors and/or venture capitalists. Mindfulness is key in these forms of capital raise as various requirements and limits are applicable to businesses under these regimes.
Crowd Sourced Funding is a new and popular way to raise capital through online intermediaries whereby online investors raise capital your business needs for a very, very small part of your business.
Common questions about capital raising
What type of Capital raise is better?
The answer to this question is dependant on a number of factors. Primarily, this will depend on what position you and your business are in. Have a non-obligational chat with us today on 02 9262 4003 to find out more.
Is crowd sourced funding safe?
Absolutely. Crowd-sourced funding, although a newer type of capital raise, is as equally as reliable as your traditional debt vs equity debate. Crowd-sourced funding is regulated by the Corporations Act (Crowd-sourced Funding) Act 2017 and has with it a prescribed number of legislative requirements needed to be complied with.
Do I need a lawyer for a capital raise?
There are several legal requirements that need to be complied with during a capital raise matter and many legal documents and agreements that need to be drafted in relation to the capital raise. We strongly advise seeking the assistance of one of our experienced business and commercial lawyers here at Ivy Law Group to help you with this process.
Common questions about buying or selling a business
If you’re looking to purchase a business or company, it’s important to seek legal advice from an experienced commercial lawyer as soon as possible to assist you in this process.
There are many areas to consider including the business structure best suited to your needs, finance and tax considerations, undertaking due diligence, the goodwill of the business, contract documentation and any capital raising methods you wish to consider.
To learn more, refer to our section on ‘Business Transactions: Buying or Selling.’
There are many legal implications and requirements involved with selling a business and so it is important to engage an experienced commercial lawyer early on to assist you in this process to ensure a smooth transition.
There are many factors to consider including: sale structure and inclusions, contract documentation, employment concerns, supplier agreements/contracts, leasing arrangements, sale costs and tax implications, intellectual property and more.
See our article on ‘key differences between a business sale and a share sale’ to learn more.
Due diligence in an integral part of any business transaction, particularly if you are the purchaser. It requires you to thoroughly investigate the business so that you can decide whether it is a viable business purchase. Due diligence generally involves:
- verifying the banking and financial position of the business or the company
- reviewing the material contracts associated with the business(es)
- verifying the corporate ownership structure, ownership of business assets, including IT and intellectual property rights
- verifying the employees and suppliers of the business or the company
- investigating any legal proceedings commenced by and against the company or in relation to the business
- compliance with regulatory requirements
Goodwill of a business generally covers intangible assets such as the business name, intellectual property (trademark and patents), and customer lists or databases.
There are many different ways to raise capital for your business. The three most common are:
- Debt capital – this is essentially raising capital by borrowing money.
- Equity capital – this requires you to sell part of your business in return for the capital used to grow the business. Equity capital allows you to raise more capital than you might be able to through a loan or security.
- Other forms – crowd sourced funding is a new and popular way to raise capital through online intermediaries whereby online investors raise capital your business needs for a very, very small part of your business.
Our commercial lawyers can assist you with working out which form of capital raise will work best for you and your business.