You should think carefully before you sign any business purchase contract and pay over your hard earned cash as deposit to the all-knowing vendor. Better still, you should seek advices. Don’t be pressured into this just because the vendor or their agent says a number of things. If anything, it should be your independent judgment on how urgently you should take an action (and this self assurance comes after careful research of the market and trusted advices).
There are many things that you should be mindful of, including:
- Are you paying the market price?
- How well do you know the area?
- How well do you know the business?
- Is there valid lease in place? There should be a sufficient lease term left to run with a couple of options (to renew the lease).
- Are there relevant permits and licenses for this business?
It is often the last item that people overlook. From the purchaser’s point of view, the local Council would be the first point of call in trying to verify whether there is required permits for the business to operate out of the premises. There are two separate considerations: first, permits for the premises (e.g. food premises, take away shop, physiotherapy, etc) and second, license for you to carry out the activities (e.g. food hygiene, physiotherapist, accountant etc). All these need to be satisfied.
The service provided by the government, called ABLIS search can provide you with a very good starting point in relation to considerations that you should give in starting or buying any businesses.
If there is no permit in place, there is potential for significant damage/disruption to your business including fines, costs of DA (development application), loss of income etc. Therefore, it is vital that you check this even before signing any contract. If there is any issue, you must require the vendor to remedy the problems.
The above advice is not intended to be comprehensive but is provided only for your reference. You should seek (professional) advices.