When deciding if you want to buy a business, you should start by exploring the business sector so you know the risks, trends and market conditions. There may be aspects of running a business in a particular industry that you hadn’t thought of.
When you’ve found a business that you’re interested in buying, you should conduct due diligence.
Due diligence involves assessing the value of a business and the risks associated with buying it. It is usually conducted after the buyer and seller have agreed to a deal in principle, but before a binding contract is signed.
During the process, you should consult an advisor, such as a lawyer or accountant, to help you examine key aspects about the business and its sale, including:
- legal implications and tax considerations
- asking price and valuation
- financial records and accounts receivable
- sales, expenses, debts, and profit margins
- warrantees and refund commitments
- business assets, equipment, and stock.
Don't forget to check your licencing obligations
Many business licences are issued to the business owner, not the business itself. This means that if you are purchasing an existing business you may need to apply for a range of licences to ensure you comply with regulatory requirements.
The Australian Business Licence and Information Service (ABLIS)
can help you identify the national, state, local and industry-specific licences, permits, approval, regulations and codes of practices you need to consider in your business.
It is also recommended that you contact key service providers such as utility providers (SA Water
, SA Power Networks
, etc.) to investigate your licencing obligations relating to the use of their services.