Buying an existing business

I'm thinking about buying an existing business. Where should I start?

Before agreeing to purchase the business, or even making an offer, it is prudent to make some enquiries about the business and the entity selling it. This process is known as "due diligence". The purpose of due diligence is to identify any potential issues in respect to matters such as the lease, intellectual property, employees, major contracts, suppliers and liabilities.

A purchaser of an established business can often make their own general due diligence enquiries. However, a lawyer and an accountant should be engaged by the purchaser to undertake due diligence enquiries on specialised financial and legal issues which may arise.

Depending upon the type of business being conducted, there may be other matters specific to that business which require examination.

We have a comprehensive due diligence checklist for vendors and purchasers of businesses. It will assist vendors to have their business made ready for sale and purchasers can make a thorough appraisal of a business prior to any purchase. We are happy to email this checklist to you, upon request. Please email mitchell@sharrockpitman.com.au to request a copy of the due diligence checklist.

The information contained in this article is intended to be of a general nature only and should not be relied upon as legal advice. Any legal matters should be discussed specifically with one of our lawyers.

Liability limited by a scheme approved under Professional Standards Legislation.

For further information contact  
Mitchell Zadow

Mitchell is the Managing Principal of our law practice.

He is an Accredited Specialist in Commercial Law (accredited by the Law Institute of Victoria). He also deals with areas of Employment Law, Wills & Estate Planning and Probate. For further information, contact Mitchell on his direct line (03) 8561 3318.

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