Buying a business | 7 min read

Who to trust on your business buying ‘team’?

Last updated: March 28, 2022

Buying a business isn’t something most people do every day. So, it’s important that you assemble a team of trusted professionals to advise you through the process. Don’t be tempted to think you can go it alone – especially when you’re investing a lot of money.

A lawyer that specialises in business sales

Why you need one

If you choose to go it alone, the risks are significant.

“If you’re acting for yourself, you have a fool for a client,” says Stephen Giles, a lawyer with Norton Rose Fullbright who specialises in business sales. “Most contracts are not even-handed and will require amendment. Lawyers are good at identifying those risks. You will get a far better deal, and you will not end up with a dud business.”

What they’ll actually do for you

Your lawyer will:

  • Investigate any regulatory issues
  • Check licences and registrations
  • Draft a purchase agreement
  • Help you conduct due diligence
  • Protect your interests during negotiations
  • Give you a detailed view of your contract and obligations
  • Share recommendations to get you the best possible deal

It’s important to choose a professional who has a lot of experience in commercial and business sales. If you’re investing in a franchise, engage a lawyer that specialises in franchising.

“A lawyer will provide general advice on the risks and whether the franchise or business stacks up, ensure the contracts are fair and any special conditions you need are included, and explain the contracts to you if you wish to participate in negotiations,” says Stephen.

How to find a lawyer that specialises in business sales

Stephen recommends getting a recommendation from the Franchise Council of Australia (FCA), your state’s Law Society or Law Institute, or from industry advertisements. Internet searches may also help you find what you’re looking for.

What experience to look for

FCA CEO Mary Aldred strongly recommends “the best first step you can take is to get expert advice. That means getting legal advice on buying a business from a lawyer who deals with franchise or business agreements every day, not a suburban solicitor who might do wills, probate, family law and look at a franchise agreement once every few years,” she says.

Lawyers with expertise in business sales will quickly be able to spot any red flags or abnormalities. They’ll have a good idea what a contract for a business in your chosen industry typically looks like, and advise you accordingly.

“They’ll have experience handling the purchase and sale of a business, understand different franchise/business models, and they’ll know what is and is not “normal” about your contract,” says Stephen.

How much they’ll cost

There’s no set cost for a business lawyer’s fees, but Stephen says you should be able to get a good idea when you first consult one. “You can expect $1500 – $3000 for a relatively uncomplicated transaction. Lawyers must give a fee estimate and scope of work at the start, so remember to ask for one.”

What to prepare

Don’t assume your lawyer will do all the groundwork and negotiation for you. You’re purchasing the business so you need to be across all the details.

Before each interaction with your lawyer, write a list of questions to discuss. “It is more efficient, and less costly, if you ask questions rather than put everything in the hands of the lawyer,” says Stephen.

If you’re at the stage of looking at contracts, it’s important you look over the documentation and sales contract yourself. This will give you a better understanding of what you’re signing up for, and help you ask the best questions to your lawyer.

A specialist business sales accountant

Why you need one

Accountants make sure the sale stacks up – they crunch the numbers. In fact, Stephen Giles (see above) thinks they’re even more important than lawyers.

Clayton Hickey, Partner at PKF, explains why they’re so crucial.

“An accountant is highly skilled in acquisition due diligence. That is, identifying all the accounting, financial and taxation issues which could have an impact on value. Accountants will act as your advocate in this area. They are experts in the complexities of valuation and are the key factor in ensuring you do not pay too much.”

What they’ll actually do for you

Your accountant will advocate on your behalf on all elements of the purchase, including:

  • Undertaking due diligence and identifying opportunities to push back on and negotiate price
  • Attend meetings with the vendor, banks and lawyers
  • Provide guidance on the appropriate structuring, tax and funding mechanisms
  • Share stories and their experience with you – they have done this many times before

Most importantly, you can expect them to take the time to properly understand what you really want to achieve from your business purchase. What lifestyle do you want? How much do you want to earn? How much time do you want to commit to my family?

It’s critical that your accountant knows these things, as they’ll be honest with you about which opportunity is the right one for you.

How to find one

If you’ve found a lawyer who specialises in business sales, ask them if they have someone they’d recommend. According to Clayton, it can help immensely if your lawyer and accountant have worked together on a business sale before.

If that’s not an option, certified legal bodies such as the CPA can help. If you want more information on how to find an accountant for your business purchase, look here.

What experience to look for

It’s crucial you find an accountant who has the experience and expertise on hand to give you the thorough support you’ll need.

“Not all accountants practise in business sales,” says Clayton. “It’s also important that the accountant you select works in an accounting firm with other experts relevant to the purchase. For example: tax specialists; structuring and asset protection experts; and funding experts. Your accountant and lawyer having also worked together on a purchase transaction before is an advantage.”

How much they’ll cost

Accountants typically charge an hourly rate, which is why it makes sense to prepare as much as you can. If they have to dig for information, it comes out of your pocket.

However, Clayton suggests trying to get a fixed rate. “I would encourage purchasers to obtain a fixed engagement fee to ensure you have certainty over your fees.”

What to prepare

The more information you have ready for your accountant, the less legwork they’ll have to do. That saves time and money, and ensures they can give you prompt advice and support.

Clayton says it’s a good idea to prepare:

  • Background info about the business. How long it has operated for, what it does, and anything else you know about its current situation
  • Financial information. Obtain profit and loss statements for the current and preceding three years
  • Funding the purchase: Ideas on how you intend to fund the purchase
  • Your expectations. What lifestyle would you like to lead as a result of buying the business. This will allow your accountant to let you know if the business meets these parameters
  • Thoughts on the future. If you have a family, how you would like your family involved in the business and your assets structured and preserved so that future generations are able to maximise their benefits

Clayton also suggests you ask:

  • The best structure to place the business in
  • How to achieve optimal asset protection outcomes
  • How the purchaser (you!) can ensure their tax position is appropriately managed
  • What the optimum funding structure is
  • If the accountant has the expertise to deliver on these diverse items

A friend you can trust

While professional help is critical when purchasing a business, it can also be beneficial to have a family member or friend that you can confide in.

Taking the time to talk to a confidant who knows you well can be immensely valuable as you go through the buying process. They can help you assess if a potential business is really right for you.

Ultimately of course, the decision is up to you. But being able to discuss your apprehensions, excitement, and ideas with someone you trust, who can challenge your thinking, may help you work out your next step.

The bottom line

Buying a business isn’t a simple process, so make sure you take your time and get the expert advice you need. Do that, and you’ll be in the best possible position to ensure your business purchase becomes an enduring success.

Ready to see what businesses are out there for you? Search for business opportunities now!

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