Buying a Business: The Key Things to Check First

Buying a business is exciting, though it is also a significant financial risk, and it needs to be entered into carefully.

One of the most important early steps is looking closely at the financials of the business. That is a conversation to have with your accountant, and you would want at least three years of financial records so you can properly assess whether the business is viable.

The next step is to look carefully at the contract documents. You want a valid contract for the sale of the business, with all of the required attachments, so that you are completely clear on what you are buying.

There is also the question of employees. When you buy a business, you have options, which are usually settled in conversation with the current owner. You can terminate the existing employees and rehire them under your new business, generally on similar terms to those they currently have. Alternatively, you can take them on as transferring employees. Where they are transferring employees, you need to consider matters such as their annual leave and long service leave entitlements. Assessing who the employees are early on, and deciding whether to terminate and rehire or to transfer them across and carry over their entitlements, is an important consideration at the outset.

We have prepared this article to share general information. For personal advice, book a consultation with our team.