Buying a Business
Business Acquisition
Before purchasing a business, it is crucial that the purchaser undertake a comprehensive review of the business in order to avoid any dangerous surprises post-acquisition.
The business acquisition process typically involves the following key stages:
- Development of an acquisition strategy
- Identification of potential acquisition targets
- Approaching acquisition targets
- Entering into confidentiality agreements
- Initial review of the business
- Entering into a heads of agreement
- Conducting due diligence
- Finalising purchase negotiations
- Completing the acquisition
- Integration with the existing business
Assetxcel can also assist companies with their purchase price allocations following an acquisition and subsequent impairment testing.
Ten things you should know when buying a business
1. What are you trying to achieve?
Define the business you want to buy. Write down why you are buying a business i.e. lifestyle, or to create wealth, commitment of time etc. We all have different reasons but you must ensure you carry out your research.
2. Do you have the necessary skills?
If you are buying a trade business then yes it is best to have the related skills unless you intend to operate the business under management. However, you do need to have business skills in the areas of planning, budgeting, marketing and supervision. You could also investigate a small business course if you are deficient in this area.
3. Finance for purchase
You need to have sufficient funds available to cover the purchase price or deposit required to purchase the business, stamp duty, settlement costs for your conveyancer/lawyer, lease transfer costs and for stock. You should also consider the operating costs or working capital for three months and be prepared to have the extra funds to cover this also. This does not apply to all businesses.
4. Who to obtain finance through
It is best to obtain approval from your bank or finance broker before making an offer. Or should you require assistance please contact Judi Sangster on 0412 576 665.
5. Fact finding
With Assetxcel we provide potential purchasers with an Information Memorandum which covers the following enabling you to make a sound decision. This includes:
- A description of the business, its products, markets, competitors and potential
- Three-years financial statements
- A list of staff with duties, pay and length of service
- A list of plant & equipment
6. Research
Revise the Information Memorandum, check that the figures make sense, check the method of valuation and seek advice from your accountant and/or business advisors. If you are unsure make a list of questions to ask the broker and vendor. Buying a business can be a very difficult decision and we are here to assist you.
7. Act when you find the right business
When you find a business that meets your objectives and is within your budget, put an offer in without delay. It is often best to do this in writing so that the vendor can see that your intentions are serious. Always ensure that you have a due diligence period and if you need to borrow funds that there is also "a subject to finance" clause included in the offer.
8. Making an offer
We have often seen a vendor reject a verbal offer, only to accept the same offer when put in writing from another purchaser. A written offer on the table, together with a deposit, tells the vendor you are serious. The deposit is refundable if there are any doubts regarding due diligence or you are unable to obtain finance.
9. Due diligence clause
A due diligence clause provides for the purchaser to carry out a complete examination of the business. This allows the purchaser and his accountant to attend the business, observe its operation, and to inspect all the books and financial statements.
This usually takes around 7 to 10 days and gives you an opportunity to verify all the information you have been provided.
10. Contract preparation
Assetxcel can provide a standard business contract in South Australia however in
other states it is recommended that a solicitor/lawyer is engaged. If there are
many restrictions or conditions it is wise to use a professional person.
Click here to register your buyer details >
Overseas Buyers
There are a number of visa options for business people to enter Australia.
Overview Visa Options
Business people can apply for a visa to conduct short business visits, establish or manage a new or existing business or invest in Australia.
Business Development Sponsorship
Information about State/Territory government sponsorship for Business Skills visas is available.
Monitoring Business Development
If you hold certain Business Skills visas your business may be monitored by the department.
Visa Options
Business Development - Provisional
These visas, known as Business Skills visas, are for business people to establish a business in Australia, manage a new or existing business or invest in Australia. All except the Investor Retirement visa offer a pathway to permanent residence.
Business Development - Permanent
These visas, known as Business Skills visas, are for people who have established the required level of business in Australia while holding a provisional visa. A direct permanent residence visa is also available for high-calibre business people.
For further information visit the web site
www.immi.gov.au
and www.migrationbureau.com.
|