Commercial Purchases & Sales

Commercial purchases and sales include the buying and selling of businesses, as well as the buying and selling of premises used for the running of businesses. Our experienced team can assist with a range of commercial property transactions and business sales and purchases.

Buying and Selling Commercial Premises

Business Sales & Purchases

Inclusions and Exclusions

When buying or selling a business, it is not always immediately obvious what is being bought and sold. For instance, does the purchase of the business include the premises where the business is run, the name of the business and the goodwill associated with it? If the sale includes plant and equipment, does this involve any inventory from the business? Additional consideration should be given to whether the sale/purchase includes any intellectual property, including the business’s trademarks or patents, registered designs, or logos.

Due Diligence

It is also up to the buyer to ensure that the business that they are buying can legally be run as a business. The buyer must confirm that the business is a permitted use at the premises where they intend to operate. The buyer needs to also check that they are eligible to hold any relevant approvals, permits and licences. For instance, a buyer must meet the requirements to hold a liquor licence, irrespective of whether the previous owner was permitted to hold such a licence.

Establishing Value

The value of a business can be more difficult to establish than the value of a residential property. There may not be any comparable businesses in the same area to gain a benchmark for price. However, there are methodologies that can be used to calculate value, such as a multiple of the yearly income of the business. Alternatively, a business may be valued based on its inventory, plant, and equipment, plus a premium for the value of the existing goodwill. It may be this last element that is the most difficult for the buyer and seller to agree.

Conditions

Typically, a contract for the sale or purchase of a business is conditional on fulfilment of various conditions. When such conditions are not satisfied within the timeframe required under the sale of business agreement, either party may gain the right to terminate the agreement. The type of conditions and penalties for the failure to complete these conditions should be clearly spelt out in the contract.

If you are planning to buy or a sell a business, it is essential that you seek legal advice to ensure you are in a position to satisfy the conditions of the contract within the required timeframe. A legal due diligence at the earliest opportunity will put you in the best possible position to successfully negotiate the sale contract.

Leases

The sale of a business frequently involves a lease agreement. Often the business seller has a condition in their lease which allows for the transfer of the tenancy, usually only with the consent of the landlord. We recommend getting legal advice when reviewing the terms and conditions of a lease, and to assist with negotiating with the landlord.

We are property transaction specialists providing focused, quality service. We are licensed by the New South Wales Department of Fair Trading and carry professional indemnity insurance for your protection, should the need ever arise.

If you need any assistance, contact [email protected] or call 02 9481 7000 for expert conveyancing and property services.