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Posted: 2 Jul 2009
It is not unusual for a business purchaser to find themselves substantially down the path of an acquisition and then realise there are key issues which were not contemplated either:
• During the early stages of their decision to acquire the business or
• Around the time the business is transferred.
The implications of these ‘surprises’ can range from being a temporary nuisance, through to having a disastrous impact on the goodwill and value of the business.
• Key staff – Fundamental staff retention issues should be addressed early in the transaction. The vendor is responsible for accrued leave (employee) entitlements.
• Clients – This might include providing sufficient time for the seller to introduce clients to the purchaser by organising introductory visits.
• Current Listings – Agreements should be identified and transferred in accordance with State & Territory legislation.
• Intellectual property – Business name/s, logo’s, copyrights, trademarks, licenses, agreements, systems and processes should be identified and transferred.
• Advertising agreements – Advertising agreements should be identified and transferred, including permission to use artwork and designs.
• Passwords, logins and keys – These items, including software, security and telephone information should be transferred.
• Eftpos & Banking facilities – This must continue to function uninterrupted.
• Permits, accreditations, compliance certificates and approvals – While these are frequently overlooked they must be considered.
Once the premises are taken over, the buyer will possibly already be overstretched just settling in. Therefore to avoid business interruption, the best time to ensure everything is in place is prior to the business being transferred or during a handover period.
• Documentation – The old and new business owners need to follow through to ensure all documentation relating to the transfer is completed. This can include share transfers, assignment of lease agreements, and/or business name transfers.
• Restrictive covenant – The new business owner needs to ensure the vendor does not set up and compete against the buyer. This usually involves a restriction which is:
(i) to the extent of not participating within the industry
(ii) geographical (‘x km’s distance’)
(iii) for a period of time (‘x years from transfer’)
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