Growing or realising your business interests through acquisitions, mergers or sales is something all business owners will face as part of their commercial life. Whether you are buying, merging and selling, each of these transactions present different legal and commercial issues that require careful consideration and planning.
You can be confident that we have the expertise to ensure that each transaction is conducted so as to maximise your returns. Our aim is to ensure that our input provides you with value or savings that far exceeding our fees. Where possible, we are open to negotiating fixed fees on transactions based on scope of work and deal size, providing clients with added certainty.
Our work in this area starts with considering the nature of the transaction with our clients, and then the drafting and negotiating the appropriate documentation to give it proper legal effect.
We generally act for clients acquiring or selling businesses with values from $150,000 to $20 million, or deals that involve strategic acquisitions and mergers. Our sector experience includes retail, wholesale & distribution, professional services, online businesses and information technology, manufacturing, transport, farming & resources.
Acquiring a Business
Small to medium business acquisitions are often undertaken for a variety of reasons. Whether you are expanding an existing business or making a change for lifestyle reasons, we can assist to ensure the transaction is smooth and fruitful.
Unlike real property, the value in a business is largely intangible in the form of goodwill. A business is made up of a myriad of rights and assets which all operate together to produce profit. In order to acquire the business as a going concern our role is to capture all of those parts and ensure that they will continue to operate effectively under new ownership.
When purchasing a business there are a number of factors to consider. They include:
- the terms of the contract of sale provided by the seller or agent, or whether you wish us to draft the contract to present to the seller;
- the most appropriate entity to the purchase the business with, along with asset protection and taxation implications;
- whether you will need to have the business premises lease assigned to you;
- whether there is any vendor finance to be provided, and loan agreements and securities which may be required;
- whether the seller or other key persons should be restrained from competing against you after settlement;
- whether the assets of the business are encumbered, and how to ensure you obtain clear title;
- the transfer of intellectual property including trademarks and business names; and
- whether the business is subject to franchise agreement.
Selling a Business
When selling a business, and realising its value, you should consider:
- special terms you might want included in the contract of sale;
- any representation or warranties you have made or which may be implied in the sale agreement, and possible director liability;
- whether vendor finance is to be provided and what security you will take;
- any restraints of trade that have been proposed by the buyer; and
- capital gains tax implications.
Share & Unit Sale Agreements
We are experienced in the drafting, negotiation and completion of share sale and unit sale agreements. Share and unit sales are often conducted for tax planning reasons and can be more complex than business sales. They often involve the seller providing warranties for any ‘skeletons in the closet’ that may become the responsibility of the purchaser, such as unpaid tax. Often a portion of the purchase price is held as a retention against any future claims against the seller of the company or unit trust.
Capital Gains Tax
For the majority of small to medium business owners the value of your business (and commercial property), may well be your largest asset. It is therefore critical on its sale that you receive the maximum available proceeds after tax. Many Australian business persons do not take advantage of large tax savings through poor tax planning and the holding of business and other assets through the wrong entities.
When you are selling your business, the ATO can be very generous by making available Capital Gain Tax concessions. The rules in this area are quite complex and there is no automatic entitlement just because you consider your business is “small”. We can advise on your eligibility for the vast Capital Gains Tax concessions that are potentially available.
If you are acquiring, merging or selling a business, please contact Matthew Rouse or Peter Rouse on 07 3648 9900 or email us through our Contact page.