Key Legal Steps to Protect Your Investment When Buying a Business in NSW

Purchasing a business can be exciting, but without proper legal safeguards, your investment could be at risk. Whether buying a small café, a retail shop, or a larger enterprise, ensuring due diligence and legal protections is essential. Here, our business lawyers at Szabo & Associates Solicitors review the key legal steps to protect your investment when acquiring a business in NSW.

Conduct Thorough Due Diligence

Before finalising a business purchase, conducting a comprehensive due diligence review is crucial. This process involves thoroughly examining the business’s financial records, contracts, assets, liabilities, and legal history. We can help by:

• Reviewing financial statements: Ensuring the business’s financial health aligns with the seller’s claims
• Examining contracts: Analysing existing contracts with suppliers, customers, and employees to spot any unfavourable terms
• Assessing assets and liabilities: Verifying ownership and condition of assets and carefully reviewing outstanding debts or legal claims
• Investigating legal compliance: Ensuring the business adheres to all relevant NSW and federal regulations, including licensing, permits, and workplace safety standards
• Checking intellectual property: Confirming the ownership and validity of trademarks, patents, copyrights, and domain names

Review and Negotiate the Sale Agreement

The sale agreement is the primary legal document governing the transaction. It should clearly outline all key terms, including:

• Purchase price and payment terms
• Assets and liabilities included
• Warranties and representations
• Restraint of trade clauses
• Conditions precedent
• Due diligence clauses

Transfer of Business Name and Licences

If the business operates under a registered business name, ensure you legally complete the transfer with NSW Fair Trading. Check that all necessary licences or permits, such as liquor licences, food business registrations, or industry-specific permits, are transferred or obtained. Non-compliance with regulatory requirements can lead to legal complications and potential penalties.

Verify Lease Agreements and Property Rights

If the business operates from leased premises, review the lease agreement carefully. Confirm whether the lease can be transferred or renegotiated on favourable terms. Some leases may restrict assignments or impose financial obligations on new owners. A legal review can help you avoid unexpected rental increases or restrictive conditions that could impact your business operations.

Assess Employment Obligations

If the business has employees, you will need to address their employment contracts and entitlements. You must understand your obligations under the Fair Work Act 2009 and relevant NSW employment laws. This includes:

• Transfer of employment: Determining whether employees will continue under existing contracts or new agreements
• Entitlements and liabilities: Managing accrued leave, superannuation, and redundancy entitlements
• Workplace health and safety: Ensuring compliance with current workplace safety standards to avoid future liabilities

Understand Tax and GST Obligations

Purchasing a business has significant tax implications. You will need to assess whether the transaction involves Goods and Services Tax (GST), stamp duty, or capital gains tax. Working with our business lawyers can help you structure the deal tax-efficiently.

Seek Legal Advice

Purchasing a business is a significant investment, and engaging our qualified NSW business lawyers is crucial to protecting your interests. We guide you through the due diligence process, draft and review contracts, and ensure compliance with all relevant legal requirements.

Contact Szabo & Associates Solicitors Today

Szabo & Associates Solicitors provides comprehensive legal support to businesses in NSW. Contact our business lawyers today to discuss your business purchase and ensure a smooth and secure transition. Investing in legal counsel is an investment in your new venture’s security and longevity.