1
2
3
4
5
6
7
8-

1 What is my business worth?

Assessing what the market will pay for a business is often a complex and time-consuming process and requires considerable business sales and valuation experience.

Mergers & Acquisitions’ qualified professionals have many years of experience in determining business values. Our extensive knowledge of business sales consists of our own proprietary information as well as extensive data accumulated from research and monitoring of private and public business sale transactions.

The market value of a business is influenced by internal as well as external factors outside of the seller’s control. Mergers & Acquisitions have devised a comprehensive questionnaire and checklist which addresses the essential issues impacting on business values.

Because Mergers & Acquisitions focus exclusively on business acquisitions and divestments we are able to analyse prevailing market conditions and implement innovative marketing and sale strategies that helps to deliver the best value for a business.

 



2 What is Due Diligence?

The concept of Due Diligence is well developed in overseas jurisdictions and was originally designed as a defence to an action for civil liability in the context of issuing a company prospectus.
The term has now gradually been introduced into everyday language and as there is no definitive meaning of a due diligence investigation, it is essential to define the objectives and procedures as well the effect of the outcome of the due diligence investigation, prior to the start of the proceedings.

 


3 What is the situation regarding the employees when I sell a business?

The protection of the interests and entitlements of the staff need to be handled with care and in an organised manner. The seller will need to consider the obligations in regards to the termination of employment of the employees who do not transfer to the employment of the buyer. In regards to leave entitlements, three main types need to be considered: Annual leave, Long service leave and Sick leave.
Employment issues are complex and subject to a range of differing state and industrial awards. Mergers & Acquisitions are able to assist with advice relevant to these issues in conjunction with the legal representatives for each party.


4 Will I pay Capital Gains Tax upon the sale of my business?

Capital gains tax exemptions and concessions relating to the sale of a business need to be considered in light of the individual circumstances of the seller prior to accepting an offer on the business. Mergers & Acquisitions can work closely with your specialist tax adviser on this issue.


5 Does the sale of a business attract GST?

In most cases and subject to certain conditions, the sale of a business as a going concern will be GST-free. Where freehold property meets going concern rules it may also be GST-free.

 


6 Is a Trade Restraint enforceable?

To be enforceable, a Trade Restraint generally restricts the seller from a similar endeavour to the type being sold, within a reasonable geographic area from where the customers came from, and be limited to a reasonable period of time. There is also the requirement of adequate consideration.
The agreement may specify restrictions on certain confidential secrets, business processes, customer lists, etc that are being transferred with the business.

Any Trade Restraint agreement that was entered into with a previous owner of the business may be capable of being transferred to the incoming purchaser. Importantly, the restrained persons should be the directors or key employees of the vendor company, as any restrictions preventing only the vendor company from competing would be an empty promise if the Key operators were not likewise restrained.

 



7 Is Recasting of the financial statements an acceptable practice?

Recasting or adjusting the financial statements, when done in a professional and competent manner, is an acceptable practice. However, unsubstantiated or careless adjustments can lead to a feeling of distrust which in turn can lead to offers that reflect the purchasers concerns regarding the validity of earnings.
As an example, depreciation adjustments can vary to include free cash flow considerations, useful life expectancy or replacement cost considerations. Each situation needs to be addressed in relation to its individual circumstances and merits.
Mergers & Acquisitions assists in the preparation of a credible presentation of the business with recasting elements drafted to the accurate industry criteria of likely acquisition candidates.

 



8 How is the value of Stock defined?

The method of calculating the price or value of the stock-in-trade is best defined within the terms of the heads of agreement or contract to purchase a business.
Obsolete stock, slow moving stock and products nearing their use-by or saleable date require special attention. An agreement should be reached defining the meaning and allocation of an appropriate discount or arrangement for stock falling into these categories.

The process can become complicated when dealing with businesses that have a component of raw materials, semi-finished goods, spare parts or work in progress. Similarly, goods sold on lay-by or instalment sale require an arrangement between the parties and stock held by the vendor on consignment cannot be sold to the purchaser. Mergers & Acquisitions have had considerable experience in negotiating these delicate issues.