Most businesses have expenses that are personal or one-time expenses that a new owner does not have. This list is intended to determine the number of expenses that could be added to the end result, which will increase the profits and thus the valuation of your business. The first page, 17 clauses and three schedules generally apply to most contracts for the sale and purchase of a business, so are put into the body of the standard agreement. However, no business sale is exactly the same, so you need special additional clauses from time to time to cover certain circumstances. The good news is that the Auckland Law Society and REINZ have drawn up a list of 73 clauses covering most of these situations. For situations outside of that, your lawyer, or perhaps your broker, would create a clause. Due diligence is a process by which the buyer conducts a “health check” on your business to ensure that it is doing as well as we have said. It is important that you understand what they are going to be looking for and why. This is an indicative list and some consultants (usually accountants and lawyers on the buyer`s side) would need much more than this checklist.
See if you can do due diligence on your business and, if you were selling now, what defects can you see? 26. Condition required for – Due Diligence 26.1 This agreement is subject to the careful consideration of the economic viability of the business by the buyer and by its various professional advisors by and by the purchaser within working days from the date of this agreement and determines the satisfaction of that request. 26.2 The seller gives the purchaser access to commercial premises and all commercial documents to the extent necessary to allow the purchaser to conclude due diligence. The buyer ensures that all disclosed information and business documents remain strictly confidential, unless it is necessary for disclosure to his professional advisors. The buyer is not authorized and undertakes not to address the owner or enter the premises without the seller`s consent. 26.3 This condition is inserted for the exclusive benefit of the buyer. This is not a problem in time, especially if the seller sells to retire or the business completely. However, if the seller still has a professional life and a specific qualification, the conditions of the deduction should be carefully considered by the parties. The buyer wants the deduction to last as long as possible and be as wide as possible. The seller of course wants the opposite. A purchase and sale agreement should indicate whether the GST sale is included or exclusive. If this is not the reason, increase this with the seller.
Before you sail to sunset with the purchase price in your back pocket, make sure your debts are settled and that you are not in danger (no more than reasonable) from the buyer`s or a third party`s claims. Below is a list of the main items to deal with in the sales documentation: Do you need help selling your business? Use the form below to email me or contact me by phone: 04-499-6843. As a business broker, my goal is to educate potential suppliers with all the information for free. Before starting the sales process, it would be a good place to understand what you are getting into. The standard agreement provides that seller assistance may be required during a short transition period after the count. This support is usually not paid for the seller, but the seller is not expected that hands-on.