Buying a business in Australia is a complex matter that requires careful handling. Compared with property transfer, business transfer involves more aspects, so it requires the assistance of professional lawyers. This article will explore the six key steps of business transfer and provide professional advice from lawyers to help buyers avoid potential risks in the process of business transfer.
1. Six key steps of business transfer
- Establishing a company and registering a business number: In Australia, business and company are separate. New immigrants usually need to establish a company first, and then register a business number (ABN, ACN) so that the company can purchase the business.
- Finding a business: There are three ways to find a business: through business intermediaries, online or newspaper advertisements, and recommendations from acquaintances. After initially determining the intention, it is necessary to examine the store’s customer flow, geographical location, surrounding residents and competition in detail.
- Evaluating the business: Due diligence is the key, including business operations, financial status, legal and tax compliance, contracts, lease agreements, intellectual property, assets, etc. Lawyers can help check documents, and professional accountants can analyze financial data to evaluate the true value of the business.
- Signing a business purchase and sale contract: After the price is agreed upon, the contract is signed, which is drafted by the seller’s lawyer and modified by the buyer’s lawyer. The contract contains non-compete clauses, lease transfer clauses, license transfer clauses, etc. The buyer needs to pay a deposit, which is generally 10% of the total contract price.
- Lease transfer: Business transfer is accompanied by lease transfer or new lease signing. The buyer needs to apply to the landlord for a lease transfer and provide personal and financial information. The lawyer can help understand the remaining terms of the lease, renewal rights and the landlord’s renovation plan to ensure the smooth transfer of the lease.
- Business transfer: Business transfer includes the transfer of leases, licenses, employees, inventory, and registered names. The lawyer can ensure that all licenses and permits are successfully transferred to the buyer. For businesses involving food hygiene licenses or liquor licenses, buyers need to contact the city hall for inspection and complete relevant courses. The lawyer will assist in completing these procedures to ensure the normal delivery of the business.
2. The importance of due diligence
- Financial review: Check financial statements, tax records, accounts receivable, etc. to ensure financial transparency.
- Legal review: Check the company’s registration documents, contracts, intellectual property, litigation records, etc. to ensure legal compliance.
- Operational review: Understand the company’s operations, including employees, supply chain, customer relationships.
3. Identify and manage risks
During the business transfer process, the following risks need special attention:
- Financial risk: Ensure that the financial data of the target business is true and reliable to avoid economic losses caused by financial problems.
- Legal risk: Ensure that the business transfer process complies with legal regulations to avoid disputes caused by legal issues.
- Operational risk: Understand the operation of the target business and assess whether there are potential problems that affect the continued operation of the business.
4. Professional advice from lawyers
- Hiring professional lawyers: Ensure that there are professional lawyers to provide you with legal advice and support throughout the business transfer process.
- Contract details: Ensure that every clause in the transfer contract is unambiguous, especially key details such as price, payment method, and delivery date.
- Compliance review: Ensure the compliance of the target business in terms of law, taxation, etc. to avoid future legal risks.
- Tax planning: Consult tax experts to understand the tax impact of the business transfer process and make reasonable tax planning.
Business transfer is a complex process that involves risk management in many aspects. By understanding the key steps, conducting due diligence, identifying and managing risks, and listening to the professional advice of a lawyer, you can better protect your rights and interests and ensure a smooth business transfer. I hope the content of this article can provide you with valuable reference in the business transfer process. If you are considering buying a business in Australia or have any questions about business transfer, please contact our professional team immediately. Veracity is committed to providing high-quality and efficient legal services to Chinese Australians. We will wholeheartedly provide you with personalized solutions to ensure that your business transfer process is smooth.
