By Nuriye Gokmen

On the surface, buying or selling a business can seem fairly straightforward — agree on a price, list what’s included, and set a date for settlement. But in practice, there’s much more to it than meets the eye.

Behind every sale are a number of legal, financial and operational matters that need to be properly considered and addressed. Overlooking these can lead to major problems for both buyers and sellers.

Why rushing can go wrong

We often see clients eager to finalise the deal quickly and move on. Unfortunately, this approach can leave critical issues unresolved. Some common examples include:

  • The seller not having proper ownership of the business name.
  • Buyers becoming responsible for unpaid employee entitlements that pre-date the sale.
  • Problems with transferring leases, including lack of landlord consent or undisclosed lease issues.
  • Business assets (like equipment) being broken, missing, or not legally owned by the seller.

These are just a few of the risks that can arise when parties skip proper due diligence or fail to obtain the right advice during the transaction.

What you should be thinking about

If you’re preparing to buy or sell a business, here are some of the key areas that should be reviewed and dealt with early in the process:

1. What is being sold

It is essential to agree on is what is exactly being sold and included in the sale of the business.

2. Purchase Price

if you are selling the business, how will the purchase price be apportioned? Further, tax consequences of selling a business will differ depending on how the purchase price is apportioned.

3. Lease Agreements

Does the business operate from leased premises? If so, the landlord’s formal consent is likely required to transfer the lease. This process isn’t automatic — if handled incorrectly, the buyer could be left without legal occupancy rights

4. Key Contracts

If the business relies on important contracts (such as supplier agreements or customer arrangements), check whether those contracts can be assigned. Most agreements contain conditions or require consent for assignment and ignoring these could mean the buyer doesn’t get the benefit of those arrangements.

5. Employees

What will happen to the staff? Sellers need to consider how employee entitlements are to be adjusted, while buyers must understand what liabilities they’re inheriting. The distinction between employees and contractors is also important, particularly when calculating leave, redundancy or other entitlements.

6. Training Periods

If you are buying the business, do you need assistance from the seller to assist with the operation of the business pre and post completion?

7. Intellectual Property

Is the business name registered? Are there trademarks, logos, or other IP assets that need to be formally transferred? Buyers should ensure they’re getting ownership of all branding and intangible assets necessary to operate the business.

8. Licences and Permits

Some businesses require a licence or permit to operate (for example, food or liquor licences). These may take time to transfer — or may not be transferrable at all — so it’s critical to plan ahead and factor this into the settlement timeline.

9. Due Diligence

It’s essential to undertake a proper review of the business. This includes examining financial statements, employee arrangements, key contracts, assets, liabilities, and any ongoing legal or regulatory issues. Don’t rely solely on advertising material or verbal representations.

Key take aways

Selling or purchasing a business can be a fun and exciting time, but make sure you get the legal work done properly, get in touch with us for clear, practical legal advice.

Disclaimer: This publication contains comments of a general and introductory nature only and is provided as an information service. It is not intended to be relied upon as, nor is it a substitute for specific professional legal advice. You should always speak to us and obtain legal advice before taking any action relating to matters raised in this publication.