Have you decided to sell your business? The most important thing is to ensure you have discharged all of your legal obligations under the contract of sale. You don’t want the Buyer hassling you after settlement about things that haven’t been done.
A guide to selling a business in Perth
To help you understand the business settlement process in Perth and throughout WA, we have outlined the main steps to selling your business.
Step 1 – List your business for sale
The first step is to decide if you will engage a real estate agent to sell your business or sell your business privately. You or your real estate agent will then list your business for sale.
Step 2 – Negotiate the Sale
Usually the Buyer will make you an offer to purchase your business. If you feel the price isn’t right, you may want to consider making a counter offer. A binding contract is only formed once both parties agree on the terms of the contract which can include:
- Sale price.
- The deposit amount (usually 10% of the purchase price) and when the deposit it to be paid.
- The settlement period.
- The period for finance approval (if applicable).
- If you will provide tuition to the Buyer so they get an understanding of the running of the business.
- If you will enter into a restraint of trade covenant to preclude you from carrying on similar business to the one sold, even in close proximity.
Step 3 – The Contract
An essential step is to put the verbal agreement in writing. If there is a real estate agent involved in the sale, he or she is likely prepare the contract using the “Agreement for Sale of a Business as a Going Concern” developed by the Real Estate Institute of Western Australia (REIWA) (‘REIWA Agreement”).
Lawyers can review any contract prepared by yourself or a real estate agent and can draft contracts to suit the needs of a particular transaction.
Lawyers are only able to represent the Seller or the Buyer but not both parties due to the possibility of a conflict of interest.
Step 4 – Pre Settlement
Typically, a business settlement agent or lawyer will assist you during the settlement process by:
- Conducting searches on the business to confirm the assets are free from encumbrances and advising you on how to discharge any encumbrances.
- Transferring the business name.
- Adjusting all income and expenditure of the business.
- Liaising with the Landlord regarding adjusting rent and outgoings.
- Submit enquiries to the local council on any outstanding fees.
Your usual obligations under the contract include:
- Completing a stock take.
- Ensuring there is an assignment of lease of the business prepared. If the Landlord does not have a preferred lawyer, you can engage a lawyer to prepare an assignment of lease on your behalf
- Making arrangements for any business contracts to be transferred to the Buyer at settlement.
Step 5 – Settlement Day
At settlement, the required legal documentation and funds will be exchanged. Your business settlement agent or lawyer will attend settlement on your behalf and will notify you and the real estate agent once settlement has gone through.
Why Choose CS Legal
Seeling a business can be a complicated process. CS Legal can assist you every step of the way, from drafting the sales contract to the settling the sale of your business.
Our lawyers can prepare specifically drafted contracts to suit the needs of your particular transaction ensuring all factors have been taken into account. We will provide advice and answer all your questions throughout the process, allowing for a smooth transaction and the successful sale of your business.