The decision to pursue purchasing a business can be made for many reasons. It can be viewed as a natural progression for a bold entrepreneur who wants to take an aggressive step. It could also be a strategic ploy to undercut the competition.
Whatever the rationale behind the move, there will be legal implications that come attached with the entity as you attempt to maneuver through the complications of taking on the name and the responsibility.
These concerns can prove to be too much of a burden both mentally and logistically speaking, but if you are in a position to tackle these challenges efficiently, then you should be well placed to lead the way in the years to come.
Here are some of the key legal implications that arrive when purchasing a business.
The Structure of the Business
From a franchise to a sole trader or entering into a partnership, the structure of the operation will go a long way to determining how a purchase will take place. A franchise outlet will have the supporting infrastructure in place to make the switch more efficient while the operating model including the objectives and style of services will have to be examined thoroughly by the incoming owner.
Assets vs. Liabilities
Creditors, partnered commercial interests and shareholders will want to be insured that an incoming owner has a grasp of the assets and the liabilities that are on the books. Should debt be a major factor, that is an element that should be flagged, identified and acted upon before other issues arise. In some instances, there might be ongoing legal action that is occurring and it is through the sale of a business that an operator is attempting to unload these concerns onto another party.
Type of Occupancy
From a storage facility to a shop outlet, an assembly or a large multifaceted building in the CBD, the profile of the occupancy will carry its own legal and contractual concerns. This will speak to the length of a lease and the structure of the fees from local council, as well as the cost of purchasing a business.
How many employees are on the books? What is their contract status? Are they entitled to long service leave? Do you intend to keep them on or to introduce your own staff? If they are made redundant, can you cater to those severance packages – and should it bring down the cost of purchasing a business? These are all questions that an incoming business owner will have to consider morally and legally speaking.