What You Need to Do Before You Acquire an Existing Business in Australia
Buying an existing business in Australia can be less risky than building your own business. If you’re looking for guidance on what to do, these practical tips and information will help you get on the right path.
Understand Your Target
Of course, you already have in mind a target business that you want to buy. Perhaps, you are even through with the preliminary commercial analysis of that enterprise. Before you make a deal, however, it’s advisable to engage the services of legal, specific industry advisors, and reliable tax accountants to assist you during the process.
When finalising a business purchase in Australia, you’ll face different regulatory bodies where you need to get approval from. You need to conduct investigations of your target business. Often, it’s referred to as conducting ‘due diligence’. This is an important component of most business acquisitions. In here, all your advisors should work together. They should fully understand the priorities of your business, so they’ll be better equipped to advise you of the important commercial and legal issues that may arise during the due diligence process.
Work Out the Transaction Structure
In Australia, the most common types of acquisitions are purchasing the assets of the business and purchasing the equity of the business structure. It’s important to consider the taxation implications as well as the best method for financing when structuring the purchase of a business. Discuss with your advisors the type of transaction you want to undertake to make sure your acquisition best achieves your commercial objectives.
Enter into Legal Documents
When all are set, you may now enter into legal documents to record the acquisition of the business. Heads of Agreement or Letter of Intent, Term Sheet or Memorandum of Understanding, Sales Agreement, and Confidentiality Agreement are some of the legal documents you may need.
Consider the Post Purchase Obligations
When everything is finalised, it’s common for a sale agreement to put the obligation on the seller and or buyer. See if there are ongoing obligations for you, once you have bought the business. ASX and the Australian Securities and Investments Commission are regulators that may require you to disclose and report some information as the new owner of the enterprise.
Purchasing an existing business in Australia can be an exciting time in your life. Just follow the above tips, so your business will run smoothly and eventually grow.