Business sale, purchase Paraparaumu Waikanae Otaki

Business Ownership

Many people have never owned a business and are not aware of the components which go into purchasing an existing business or setting up a new business. We have vast experience not only from our legal training and legal experience in excess of 50 years between the partners but also from our personal experience of running our successful law practice as a business for the last 25 years.

Just as with purchasing a house the purchase of a business has so many components which need to be thought about and documented before an unconditional commitment is made to purchase. We can help you and look forward to setting up an ongoing relationship touching all aspects of your business and personal legal requirements so you can develop it and go forward as a whole.

What Entity Will I Use For My Business

The following are the basic forms of business ownership:

Sole Trader - the business is owned by you personally.
Company - a limited liability Company is established by us for you whereby your personal liability for unsecured debts can be limited and you may receive a tax benefit as a result of lower Company tax rates.
Partnership - you trade with another person or persons in partnership without the protection of limited liability which a Company affords.
Trading Trust - your business assets are transferred to a Trading Trust which ring fences your business assets from your personal assets.
Franchise Arrangements - you own your own business but trade under the auspices of a parent body which governs the basis of your trading.

The Steps - Purchasing

The Agreement
It is essential that we are involved at the earliest possible time to prepare the Agreement for Sale & Purchase to purchase the business. Some people desire to purchase shares in the Vendor’s Company as opposed to the assets of the Vendor’s business You should NOT ENTER INTO SUCH AN AGREEMENT until we have advised you on the various steps.

The agreement needs to cover the following:

Break down of fixed assets, goodwill and stock in trade. There are important tax implications involved with the allocation of these figures.
Turnover evidence and provisions in the agreement relating to financial
evidence to support the purchase price.
Restraint of trade provisions limiting the Vendor’s ability to compete against you in business in the future.
Limitation of stock and trade movement between the date of the agreement and the date of settlement of the purchase. This can add a further significant cost to the purchase price if not properly dealt with.
Negotiating a period of assistance for you by the Vendor after settlement and the terms and conditions of that assistance.
The terms of any Lease of the premises from which the business trades.
Whether you should take over employees of the business and on what terms and conditions. This is vital to you as you may unwittingly take over past liabilities of the Vendor to the Vendor’s employees.
The use of the trading name of the business and the requirement that the Vendor changes any trading name or Company name previously owned and operated by the Vendor.
Provisions relating to any ongoing contracts the Vendor has with suppliers, trade organisations or Banks which you may or may not want to assume liability under and for.
Provisions relating to any deposits which may have been paid in advance to the Vendor for goods to be supplied by you after the settlement date.
If you are buying plant and equipment, a warranty it is in working order - have you had it valued? - is it under guarantee? and if so, the guarantee requires to be transferred on settlement.
Warranties of past performance and good corporate governance prior to and at the settlement date.
Such conditions as will enable you to withdraw from the agreement to purchase should your due diligence investigations prove unsatisfactory to you.
Depending on the type of business being purchased, we will determine the requirements for the provisions to be included in the Agreement for Sale & Purchase. We will tailor make the agreement for your particular needs.

Confirming Conditions
We will work with you to enable you to confirm the conditions of the agreement on due date. This will involve a close inspection of and advice to you with regard to:

The Lease for the premises and helping you obtain the Landlord’s consent to your being a suitable Tenant, including any required variations to the Lease to secure a longer term. This includes perusing and advising on all Deeds of Renewal of Lease, Deeds of Rent Review under the Lease, Deeds of Variation of the Lease, Deeds of Assignment of the Lease, and Deeds of Sublease of the Lease. All of these documents have implications for you.
Employment contracts or the need to reemploy all employees with new Employment Contracts.
Ongoing contracts or licences required by any Governmental or local Government bodies for the continuation of the running of the business.
The use of the premises permitted by the Lease.
All issues arising from the Vendor having General Security Agreements registered over assets of the business.
Any GST implications of the transaction.
Any and all other due diligence issues arising from your proposed purchase.

Before Confirmation of Conditions
Before the agreement to purchase becomes unconditional it is VITALLY IMPORTANT that the entity in which you are purchasing the business has been established and is legally set up. If it is not legally set up and GST registration has not been applied for from the IRD you will not be able to claim a GST refund on the purchase price or treat the business purchase as a going concern (whichever is applicable).

This could have serious borrowing and cash flow issues for you. You may be going into this business with a partner and if so, it is important you have an agreement setting out the main aspects of that business relationship e.g. a shareholders agreement in a multi-shareholder Company.

After Confirmation of Conditions
Once the agreement has become unconditional we will:

Prepare all documentation required to assign the benefit of the Deed of Lease to you.
Prepare any security documentation required to give security to your Bank for any loans required.
Check all financial arrangements including Lease payments, payment of outgoings under the Lease such as rates and insurance and any outgoings in relation to ongoing contracts.
Prepare the documentation needed for your business structuring.
Attend upon you prior to settlement to have all documents signed and to run you through the process of settlement including advice on dealing with changes to stock in trade values from the date of the agreement to the date of settlement.
Attending to the drawdown of loan funds and the payment of the purchase price.
Report to you on the day of settlement with full statements detailing all of the receipts and payments made to and by us on your behalf.
Receive all Lease documents required to give you valid title to occupy the premises pursuant to the Lease.
Register any securities required by your Lender and report to your Lender.

The Steps - Selling

Please refer to the steps of purchasing a business. The majority of those steps are relevant to the sale of a business and you may need tax advice on carried forward losses/depreciation of plant etc. In respect of any loans you have over assets of the business we will attend to all required discharges and releases of financing statements under the Personal Properties and Securities Act and repayment of your loans to your Lender.

General

Whether you are buying, selling or both we will keep you fully informed of progress through the various steps of the sale and purchase process. We are committed to meaningful communication with you, our client, so you understand the process and the satisfaction of the various steps. We are committed to making the process as easy as possible for you with the least stress to you and accordingly we work very hard behind the scenes to achieve these goals.