Information

Gather as much information as possible about the business and the industry which the business operates within. Distinguish fact from opinion. Analyse facts, and decide which opinion you agree with. You cannot agree with all opinion, you need to use the facts to form your own opinions and plans.

Confidentiality

A confidentiality agreement (or Deed) protects the parties from misuse of information exchanged in the sale process, and enables free discussion and provision of data under controlled conditions.

Inspection & Vendor Meeting

This allows the Purchaser to learn more about the day to day operation of the business, and the history of the business, and to confirm the information provided in the Information Memorandum. This is an opportunity to have a look “behind the scenes”, and is conducted by appointment with the business broker in attendance. Occasionally, it is a requirement that a prospective Purchaser should pay a refundable “Expression of Interest” Fee at this stage. This is not common, but some franchisors and Vendors will require such a commitment from prospective Purchasers, and may require the Purchaser to present their “Bona Fides” at this stage.

Confirmation of Readiness to Purchase

Before conveying an offer to a Vendor it is necessary that the Purchaser has properly prepared for the acquisition. A separate checklist is provided. Items included are having an entity established, an accountant and solicitor appointed, and finance in place.

Conditional Offer To Purchase

To secure the business, and outline the terms of the acquisition, a simple document is completed and submitted to the Vendor. If accepted by the Vendor, we can proceed to the next step, and if not accepted we use this document to present the Purchaser with a “Counter-Offer”.

Payment Of Deposit

When an agreement on terms is struck, and the vendor has agreed to the Purchaser’s Conditional Agreement to purchase the business, a deposit is paid to the Vendor’s agent, and the deposit is held in a Trust Account, until the parties authorise the discharge of the deposit. The deposit is usually $20,000 or 10% of the sale price of the business – whichever is greater. A contract is usually prepared and signed at this point.

Satisfaction Of Conditions

Once the Conditional Contract has been signed the parties work together to see if the contract conditions can be satisfied. The conditions usually include;

· Finance approval
· Due diligence
· Franchisor or landlord interview and approval
· Lease assignment

Lifting Contract Conditions

As each of the conditions is satisfied they will be removed, and when all conditions are satisfied, and lifted, the contract becomes unconditional – allowing the parties to proceed with settlement. If conditions are not able to be satisfied, the contract can be terminated, and the deposit refunded to the Purchaser.

Pre-Settlement Obligations & Actions

Once the contract is unconditional, and before the settlement has been effected, there are usually several practical issues to deal with. These may include:

· Franchisor, or Vendor training
· Advising staff, customers and suppliers
· Preparing EFTPOS, phone change, power provider, insurance, signage, marketing, advertising, domain names, business name transfer, etc

Settlement

Settlement often involves stocktake, adjustment of pre-paid accounts, change floats, staff entitlements, and a whole range of items. Your Benchmark broker has a checklist of items that they can go through on (or before) the day, to make sure that everything flows smoothly.