Our experienced team can help you throughout all stages of your business journey – whether you are just starting out, an established business ready for growth, or planning for retirement.
Sale and purchase of business
If you are buying or selling a business, it is important to have a formal agreement prepared to ensure that both parties are on the same page. The contract should set out each parties’ rights and obligations and include any additional agreements (commercial leases, service contracts, etc.) that form part of the transaction. A new owner will be bound to any agreements transferred on completion, so it is important to understand the provisions of any incidental contracts. The buyer and seller should be independently advised by their respective financial and legal professionals.
Typical provisions of a sale of business contract include:
- the purchase price, apportionment of goodwill, stock, plant and equipment
- GST and other taxation matters
- transfer of leases, licences, service agreements, etc.
- transfer of intellectual property such as business names, domain names, trademarks
- arrangements for employees – transfers, offers of employment, redundancies, apportionment of leave and other entitlements
- training periods, confidentiality and restraint of trade provisions
- representations and warranties
- due diligence, inspections, investigations
We can help you choose the most suitable legal structure through which to operate your business. This will depend on various matters such as the scale of your proposed operations and your plans for future growth, the industry in which you operate, your financial and personal circumstances, and the need to minimise personal liability. Common business structures include:
- Sole traders – may be appropriate when starting a small-scale enterprise on your own using an Australian Business Number (ABN). A sole trader is legally and financially responsible for all aspects of the business.
- Partnerships – may be ideal when another person or people are involved in, and contributing to, the business. In such cases debts and losses incurred are shared by the partners regardless of which partner ‘incurs’ the liability. A formal partnership agreement is important to allocate rights and responsibilities between the partners and can set out procedures for termination, retirement, disputes, or sale of the business.
- Companies – corporate structures can provide some level of protection for directors and officers. The company has its own legal identity and can enter contracts in its own name. Companies are registered with the Australian Securities and Investments Commission (ASIC) and have ongoing costs and annual reporting obligations.
- Trusts – can assist with asset protection and may provide more strategic outcomes when it comes to income tax and capital gains. Trusts are complex however and must meet compliance requirements and be properly managed to ensure they deliver the anticipated outcomes.
Regular cashflow is essential for any business and without it sustaining a viable enterprise is not possible. Chasing unpaid debts is a major time and money waster for business owners and account managers. There are various ways to pursue an unpaid debt, and this will usually depend on a number of matters including the entity you are chasing (whether an individual or company), the amount of the debt, the likelihood of the debtor being able to pay, and whether the debt is disputed. Sometimes issuing a letter of demand may be all that is needed to get a result. If the debtor is a company, serving a statutory demand under the Corporations Act 2001 may be your best option. Alternatively, you may take action in a relevant court or through legislation specific to a certain industry.
Unfortunately, you can throw good money after bad by using futile attempts to recover outstanding debts, so it is important to choose the most cost-effective and appropriate method in the circumstances.
Commercial and retail leases
A commercial lease is a legal contract setting out arrangements for a tenant (lessee) to occupy and carry out its business operations at commercial premises owned by a landlord (lessor). Commercial leases are more complicated than residential leases, as the lease is usually heavily customised to the individual situation. Each party should obtain independent legal advice to ensure the terms are fair and reasonable and that their respective rights and responsibilities are clearly understood.
If the premises is deemed ‘retail’ under the Retail Shop Leases Act, then the lessee will have the benefit of certain protections under that legislation and the lessor must ensure that the lease complies with these provisions. The lessor must also provide the lessee with certain disclosure documents prescribed by the Act.
Lessees should review lease terms and conditions carefully to ensure that they suit the needs the business operations and contain sufficient protections. Some of the terms you will need to review or negotiate include:
- the term of the lease and whether it contains an option to renew
- the rent, rent reviews and the method to be used for rent increases
- a plan of the leased premises including details concerning the use of bathrooms, carparks, storage and common areas
- your responsibility for outgoings and insurances
- fit-out provisions – whether you will be able to add fixtures and fittings to the premises, who will pay for these, and ownership and responsibility for removal of the fixtures and fittings at the end of the lease
- restrictions, for example, on trading hours, signage, etc.
- transfer or assignment provisions
Like many commercial arrangements, lease terms are often negotiable, so it is important to obtain legal advice to ensure that the provisions of a lease are suitable for your business and that any unreasonable terms are negotiated. We act for both lessees and lessors and can advise on your proposed leasing agreements to ensure your rights and interests are protected.