The Role Of A Commercial Lawyer In Buying A Business on The Hibiscus Coast Buying a business – image stockimages Many people in the Hibiscus Coast area want to work for themselves and so many consider buying a business. However, this is a complex process that requires many months to settle and finally take ownership. There are many interconnected aspects that need to be reviewed, assessed and negotiated before the transaction can be completed and it takes a competent commercial lawyer to undertake these tasks. Below are some insights into a few of the factors you need to take into consideration but please remember; this is not legal advice. Before you commit you must consult a lawyer about buying a business. Commercial lawyer – help financing the purchase of a business There is a common view that you need to have cash for the entire purchase price to buy a business. Without sufficient money there is no way you will be able to buy a business. But in reality few businesses are bought for cash. In fact, there are a lot of different financing options for the purchase or takeover of a company. One way of understanding your options is to talk to a commercial lawyer who will have provided similar advice to other people who have bought a business. But for now, let’s have a very quick look at some of the more common ways of funding a company acquisition. Business loans You can arrange a loan from various lenders. These include the regular banks but there are also secondary finance companies which specialise in commercial finance of various types. You can also find private financiers who may be willing to invest in your business. Your commercial law form will probably have access to various private finance sources. You will probably be required to have a deposit or contribution to the total price. Seller finance It is surprisingly common for the seller to finance the sale of the business. In short, the seller agrees to receiving tranches of money over an agreed period of time rather than the total sale price on settlement. You might wonder why this would be but it gives the seller a known income for the future, they can more easily exit the business or they may want to help a particular person become the owner. The lawyer will either draw up or review the contract for the seller finance. Mortgage finance Another common method is to take out a mortgage on a property. Your lawyer will help you with the regular mortgage process and also draw up other documents like a Trust Deed, to protect your interests. Due diligence on a business Stock valuation – image Sailom Before you buy a company you must check that it is worth the price that is being asked for. This is known as due diligence. You need to see if the firm is being fairly valued and that the buyer gets a fair deal in the transaction. This can include the physical verification of the proclaimed value of the inventory. You also need to take a close examination of the accounts to verify the sales and reported profits. Equally important is the assessment of liabilities of a business. Obviously your accountant will be the best option for this. If the target business has any property that it operates from such as a shop, warehouse or workshop, your lawyer can look at the leases for these premises. Most commercial leases have fairly standard requirements for the lease-holder but sometimes there can be more stringent requirements placed n the company. Whichever, it is better that you understand your obligations under any lease you are taking on. For example, many leases are granted with a Personal Guarantee. This means that you are personally liable for any financial issue for that lease and often continue even after you have sold the business. You do not want this so your lawyer will read through the small print and be able to explain to your any potential obligations you might face. Contracts for buying a business Most business purchases in the Silverdale area use the ADSL Sale and Purchase Agreement so you probably will not need to have the contract closely scrutinised as with a privately drawn up contract. However, there may be special clauses which you will be bound by. But in any case, it is good that you are fully aware of what the contract involves. Other legal documents in buying a business If the company has any staff, you will need to ensure that each member ahs an Employment Agreement and Job Description. Failure to do so can result in very heavy fines. If you choose a larger law firm in the area, they will also have an employment lawyer for Orewa who will be able to help with these issues. Going back to the leases, these will need to be formally changed to the name of the new business owner. Again your solicitor can handle this aspect for you. Finding a good law firm Geoff Baxter – Commercial lawyer There are numerous smaller law firms in Orewa, Silverdale and Warkworth. They may be able to handle the Sale and Purchase but they may not have the experience and understanding of the more difficult commercial leases, due diligence and especially employment law matters. This is an area of law for experts only. Buying a business is a stressful activity at the best of times so if you choose a well respected commercial lawyer for Silverdale , Orewa or Warkworth, they can make the process of buying a business easier and flow more smoothly. You can try McVeagh Fleming & Co which is a firm of commercial lawyers that can help with buying a business as the also have specialist employment lawyers as well as commercial and property solicitors.