Buying a business? Don’t forget these crucial legal steps.

Buying a business

Buying a business by purchasing an established one can be less daunting than building from scratch. If you are planning to buy a business in Queensland, there are several crucial steps that you should take to ensure that the process goes smoothly. Here are some of the most important steps:

  1. Do your research: Before you even begin looking for a small business to purchase, you should do some research on the industry and market that the business operates in. Needless to say, this will help you determine whether the business is a good investment and what you can expect in terms of profitability.
  2. Review the financials: Once you have identified a potential business to purchase, you should review its financial statements to get a better understanding of its financial health. This can include reviewing its balance sheet, income statement, cash flow statement, and tax returns. The financials should include the last three years and not just one financial year. If they only give you only one financial year, ask them why. The reason should be clear but it would also be a good idea to always verify the information they give you.
  3. Conduct due diligence. This is a crucial step in buying a business. It involves a thorough investigation of the business’ financial and legal records to identify potential risks and liabilities. This step is essential to ensure that you are making an informed decision. It also avoids exposing yourself to any unforeseen issues. Conducting due diligence lets you:
    • you can review the contracts, leases, licenses, and permits held by the business, as well as the financial statements and tax records.
    • conduct background checks on the business and its owners which can help identify any red flags that may affect your decision with the purchase.
    • identify complex issues that requires the expertise of a lawyer. Your lawyer can help you navigate through the process, identify and address any potential issues, and provide legal advice on how to proceed. Working closely with your lawyer at this stage would ensure that you are making a sound investment decision.
  4. Negotiate the purchase agreement: Once you have completed your due diligence and are satisfied with the business, you should negotiate the purchase agreement with the seller. This agreement should outline the terms of the sale, including the purchase price, payment terms, and any contingencies.
  5. Register the business: After the purchase is complete, you will need to register the business with the Queensland government and obtain any necessary licenses and permits.

By following these crucial steps, buying a business in Queensland will be successful and relatively easy. Please contact us if you need any assistance.