While you may want to ask the current owner their motivations for selling, our team will run, in conjunction with you and your trusted advisors, a due diligence investigation on the business you’re looking to buy to make sure everything is at is seems.
Are there any pending court cases over intellectual property? What is the current state of their contracts with employees, suppliers, building owners or service providers? You need an experienced legal team who can check the fine print and make sure the business is above board.
The ‘potential future earnings’ of a business is said to be its ‘Goodwill.’ It can be difficult to calculate before making an offer on a business, but this calculation takes into account (amongst other things) the customers of the business, its location, the staff, and efforts the current owner has put into the business.
If a significant part of a business’ value is tied up in goodwill, we may recommend a ‘Restraint of Trade’ clause in the Sale and Purchase Agreement, preventing the owner from selling to you, then starting a competing business across the road using the networks and contacts they have just sold to you.
Can your business take over any existing leasing arrangement? If the location is a big part of the business’ success, we can review the lease to make sure the terms are acceptable and there are no surprises for you.
Making An Offer
Buying a business in Christchurch can be more complicated than buying a house. Your offer needs to be clear and legally watertight, so both parties understand their obligations. Do you want a buffer period after getting inside the business to check the books thoroughly and conduct financial due diligence? Would you prefer to have a gradual handover, where you pay off the sale price from your new business’ profits?