The decision to purchase an established business should never be taken lightly. It is important for any individual involved in the process to be aware from the outset, the extent of work which will be involved, although instructing a business lawyer can ease this burden it will never remove it entirely. The purchase of a business/ company involves many areas of law including employment law, commercial property law, and of course many aspects of company and business law.
One of the key advantages of purchasing an established business is that it can offer greater security. This security is offered through the possibility of a loyal customer base, a business and marketing plan that may already be in place, and also the need for that particular product or service in the market area has already been proven.
However, there are many risks which are often associated with purchasing an established business, one being that it will involve a certain amount of due diligence to be undertaken by yourself, and also your business lawyer.
A key concern for many individuals purchasing a business is that certain contracts/agreements may already be established by the current business owner. These contracts and agreements will range from supply agreements to employment contracts. This will be a key consideration for many individuals purchasing a business, as they may wish to renegotiate the terms of these contracts to make them more suitable for ongoing business requirements. This is something which an experienced business lawyer would be able to advise on, and they should be able to assess whether the existing contracts are burdensome or in your favour, and whether they should be renegotiated.
Once an individual has decided to purchase a business, it will be the responsibility of their business lawyer to ensure that due diligence is undertaken thoroughly to ensure that their client is protected. Due diligence is an important process when purchasing a business, and will involve your commercial lawyer determining if the person/ business has legal title to sell the company/ business, whether they have legal ownership of all the assets, and whether there are any outstanding regulatory or litigation issues which should be addressed.
There are several different avenues for purchasing an established business which include purchasing the assets of the company, or alternatively purchasing the shares in the company. You should take tax advice on which structure will be the most tax efficient. Tax is one of the main factors/ considerations in determining which structure is the most suitable