The initial reaction of a person when looking at a really good business opportunity in the internet or newspaper is to immediately throw caution to the wind and ‘jump on it” while the business is still for sale.
A seller tends to compound the buyer’s “fear of loss” by simply saying that another party is interested and is about to close the deal with them (“My mate says he’ll come in TODAY and he’ll take over. Hurry up or miss out!”). Enthusiastic buyers could be forgiven for running to their bank, organising cheques and settling the business purchase even before signing a contract.
Soon the buyer’s enthusiasm wares off leaving a feeling of “buyer’s remorse”. Suddenly the buyer wants to get out of the contract. Guess what? The seller makes up a variety of excuses for which he cannot return the money; maybe the seller threatens to leave the buyer without any plant, equipment or signage (a worthless business); maybe the seller even threatens to remain as the buyer’s “new manager” for which he should receive an outrageous wage.
While the above scenario may seem a little exaggerated, it is becoming more and more common for people to choose to do business without a lawyer. Buyer beware! You may be falling into a trap if you choose to save on the legals and forego receiving good, clear and independent legal advice.
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The following are some of the key considerations to be done when buying a business:
- Do I really want the business?
– How am I going to finance the purchase?
– What is my expected return on investment?
– Who am I doing business with?
– What am I paying for?
– Do I need legal consent from a third-party?
An experienced lawyer can assist you with all of these issues (and more) and ensure you are purchasing a valuable business.
There is one other key ingredient that buyers should always have: P A T I E N C E. Take your time, have patience and buy what’s right for you.
Contact Stone Group Lawyers if you need advice before purchasing or selling a business.