The Process of "Buying a Business" in Queensland
2
Feb

The Process of "Buying a Business" in Queensland

A comprehensive overview of the process for individuals seeking to acquire a business in Brisbane, or anywhere in Queensland. Highlighting the importance of proper financial planning and due diligence, as well as the engagement of specialized professionals in the areas of accounting and law.

Key concepts addressed include:

  1. Financial preparation and position prior to purchasing a business
  2. Thorough examination and understanding of business operations and growth potential
  3. Engagement of specialized accountant and solicitor for business acquisitions
  4. Due diligence on financials, lease, and other accounting/legal matters
  5. Timely completion of account transfers and dedication to learning during vendor training period

For individuals new to the process of acquiring a QLD business, it is important to note that laws and procedures may vary across states. The following serves as a general guideline for buyers in Queensland.

First and foremost, we strongly advise all buyers to consult with their finance brokerer/bank to assess their financial capacity to purchase the business in question. In the current market, business owners may favor cash buyers, as the finance process can be a lengthy 4-6 week process. Being in a position to act swiftly can provide a competitive advantage over buyers requiring finance.

Once a business opportunity of interest is identified, it is crucial to promptly inspect the business and gain a comprehensive understanding of its daily operations, including the owner's role, premises, key staff, suppliers, customers, and operational requirements.

While many buyers may base their decisions solely on financial history, it is important to consider the growth potential of the business. Many long-term business owners may not be operating at optimal levels leaving room for improvement under new owners.

To proceed with the acquisition process, it is crucial to engage a reputable accountant and solicitor, preferably both specializing in business acquisitions, as this can save time and money.

A preliminary due diligence report should be conducted on the financials, lease, and any other accounting and legal related matters. This is also the appropriate time to seek advice on your buying entity/company/trust, as it may take several days to set up a new entity.

If the due diligence results are satisfactory and the decision to secure the business is made, the time frame, price, and conditions should be discussed with the agent. A standard "Contract of Business Sale" will then be drafted for review and approval by your solicitor.

A deposit of 10% of the sale price is standard practice when a contract is accepted by the sellers, and is typically held in the agent's trust account, which undergoes annual auditing.

The contract typically includes a due diligence period of 2-4 weeks to verify the information presented. Other important elements of the contract include vendor training period, restraint of trade area and time, staff entitlements, equipment included, satisfaction with the lease, and franchisor/licensor approval, if applicable.

The business transfer usually occurs 2-4 weeks after the contract becomes unconditional. During this period, buyers will need to complete account applications, EFTPOS, electricity, and phone transfers, and prepare for settlement day.

Vendor training typically occurs post-settlement and can last 2-4 weeks, depending on the level of training required. Buyers should fully commit to learning as much as possible during this period, as it can have a significant impact on the future success of the business.

For any questions regarding this process, please do not hesitate to contact the professionals at Queensland Business Sales on 1800 818 021.