Why you need a lawyer when buying a business

It’s essential to have an experienced legal professional on your side when buying a business. They’ll work with you through each step of the process and set you up for the best chance of success.

 

What will a lawyer do?

A good lawyer will take the time to discuss your goals and motivations and do plenty of background checks on the business and people involved with it.

When you’re ready to buy a business, a lawyer can specifically help you:

• Carry out due diligence and business background checks
• Set timelines for stock-takes, inspections and settlement
• Draft and review contracts and other legal documents
• Negotiate with the seller
• Supervise entity incorporating and structuring
• Organise employee transition and entitlements
• Facilitate intellectual property transitions
• Work through any tax requirements
• Manage property, leasing or licensing requirements

 

Nick Rimington from law firm Norton Rose Fulbright Australia (NRFA) says that when a lawyer looks after these things, you, the buyer, can focus on other aspects of the purchase. He also recommends getting independent financial advice from an accountant before you make any decisions.

 

What if you don’t use a lawyer when buying a business?

A good lawyer will have business buying experience that a first, second or even third time buyer may not have. If you decide not to use a lawyer, you’re opening yourself up to more risk, says Nick. This could mean buying a dodgy business, paying too much, future contract disputes, or getting into a deal that’s not in your best interest.

“Without the assistance of a lawyer, a prospective buyer is unlikely to have a comprehensive understanding of the business, its assets and its liabilities, which may leave them exposed to hidden risks and obligations”, says Nick.

 

When in the process of buying a business should you get a lawyer?

Nick recommends you talk to a lawyer as soon as you’ve found a business you’re interested in. That way you’ll have someone with legal knowledge looking out for you from the beginning.

Engaging a lawyer from the outset of your business buying journey, not midway through the process is the best idea, says Nick. Having a lawyer on your side the moment you find a business you love will ensure that your interests are protected from day one.

 

Where to start?

Before you engage a lawyer, or even settle on a business to buy, Nick suggests making a wishlist of the things you want as part of your business deal. Having a checklist gives you a clear vision and makes it simpler to see if a business fits your needs on paper.

When you’re ready to involve your lawyer, they can help you achieve the things on your wishlist and use it as a guide throughout the business transaction. A good lawyer will also be able to suggest other ‘must-haves’ and moderate your expectations on things that may be difficult to achieve.

 

Remember…

Buying a business can be complex and the devil is often in the details. Involving a good lawyer who can help you work through the fine print, investigate the business and understand any confusing jargon is invaluable.

You’ll set yourself up for the best chance of business success if you take the time to get solid legal and financial support from the very start of the buying process.

Wondering what else you should consider when purchasing a business? Check out our ultimate guide on how to buy a business.