OU LOOK FOR IN A
T OF SALE? runs the café, and are any contracts tied to Mike himself instead of the actual café. So its important to assess all areas of the business during the due diligence, so you can ensure it is properly reflected in the contract of sale. As a buyer, you shouldn’t just blindly agree with the seller without conducting your own research. Once the parties are ready to proceed with the sale, the sellers solicitor draws up a contract of sale outlining the specific details. Both parties should consult their own solicitor when signing a business sale contract to ensure they fully understand any clauses and all the inclusions. The contract may also outline any issues that may affect the sale such as; defaults on payments, false information or any changes in the business during the change over. A report conducted by Griffith University’s AsiaPacific Centre for Franchising Excellence in July 2015 found that only 28% of independent businesses consulted with a lawyer when conducting due diligence and buying a business, compared to 64% of franchisee’s. These statistics are rather low considering the business owners are signing a legal agreement with the seller. Especially the Franchisee’s who will be in an ongoing legal
agreement with the Franchisor. The study also found that the independent business owners were more likely to conduct their own market research (41%) compared to franchisee’s (14%) and maybe this gave them a sense of understanding when signing the contract. Perhaps, more education and resources are needed to ensure business owners are engaging professional advice. So before signing a business for sale contract, make sure you have conducted a thorough due diligence process consulting with your accountant or business broker and ensure a solicitors reviews the contract of sale. The last thing you want as a new business owner, is to find out you missed important aspects such as leases ending shortly, supplier contracts not being renewed or clients that have moved with the seller. These could be detrimental to your business and would have affected the sale price if properly investigated.
Best of luck in purchasing your next business, be sure to review the 6,500 + businesses available on bsale – we have been advertising businesses online for over 15 years by private sellers and brokers.
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