Buying a business is one of many strategies and choices an investor can consider and make when investing. It can be an exciting investment opportunity. However, among the excitement it is essential to ensure that your interests are protected in the transaction. So, it is important to know what to expect.Do your research thorough and well. This process is known as due diligence. At this stage you will be going through the financial statements of the business with your accountant and the financial advisor, interviewing employees and engaging a lawyer to review the contracts of the business.
Below are guidelines for you to assit with your due diligence
- -Why the business is being sold
- -Financial statements, tax records and PayG
- -Customer database
- -Suppliers
- -Conditions of assets and stocks
- -Obtain a copy of the development approval for the business from local council.
- -Any government regulations that you need to comply with
- -Any Council approvals and/or licences required
- -Obligations required by Fair Work in regards to employee leave entitlements, compulsory superannuation payments, long service leave
- -View Employment contracts If particular skills or experience required by staff
- -If the business heavily depends on the involvement of key personnel, you should consider asking those employees to stay on after the sale has been completed.
- -Insist on a training period with the seller to share knowledge about all the tasks necessary to operate the business successfully.