It doesn’t matter the reason for selling your business, here are some of the common issues to look out and prepare for and during the sale process:

1. Selling Your Company

  • is the company selling the assets or the shares?
  • If assets being sold, has any finance been paid out? Have the assets been valued by a licensed valuer?
  • If selling shares:
    • How is the share price calculated? Balance sheet value, EBITDA?
    • Does the company’s constitution limit the power of shareholders or govern the terms of the share sale?
  • Handover of directors:
    • Have the outgoing directors guaranteed/indemnified any of the company’s obligations? If so, can/have the outgoing directors obtained a release from their guarantees/indemnities?
    • Will the outgoing directors be restrained from setting up competing businesses or working for competitors? If so, on what terms and for how long?

2. Employees and Key Staff

  • Is the business reliant on any key staff? If so, will those staff remain after the sale of business?
  • If any key staff leave, are they subject to restraint of trade or non-solicitation agreements? If so, will the terms survive a legal challenge?
  • Should the terms of the restraint clause be reviewed?

3. Due Diligence

  • Have you considered getting a business valuation from a business valuer?
  • Have the financial accounts been reviewed? Should an accountant get involved?Is there a lease in place? Who is the landlord? When does the lease expire? Are there option periods and have they been validly exercised?
  • How is the business’ goodwill calculated? Where is it derived from? Brand recognition, geographical location or personal relationships?
  • Are there any claims against the business?

4. Intellectual Property

  • Does the business have valuable intellectual property? If so, who owns the IP and has it been adequately protected?
  • Who owns or controls branding?
  • Will branding be merged, changed or replaced?
  • Will email domains and addresses be carried over or replaced?

5. Franchise Agreements

  • Is there a franchise agreement in place?
  • Does the franchisor have a right to buy back the business? If so, on what terms?

6. Tax

  • Tax effectiveness, duty and capital gains considerations
  • Getting expert tax advice about the most tax efficient way to sell a business or its assets is essential.

The commercial law team at CCIWA is well placed to assist with the preparation of any sale documents and give advice on the best way forward to buy or sell a business. Please contact us at or call Daniel Vivian directly on 0435 339 474.

Written By Daniel Vivian – Senior Associate, Corporate and Commercial – Workplace Relations

CCIWA, Business Law WA and REEFWA has taken all reasonable care in preparing this document. The contents of this document do not constitute legal advice and should not be relied upon as such. Specific advice for your situation should be sought from CCIWA, Business Law WA or a professional adviser before any action is taken. Neither REEFWA, CCIWA nor Business Law WA accept responsibility for any claim that arises from any person acting or refraining from acting on the information contained in this document.

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