Want to buy a new business? Then, do a due diligence as quickly as possible. Now, what is due diligence? It is a familiar term you may hear but may not know what it actually is and why is it necessary. It simply means a detailed homework. More precisely, homework needed to purchase a company. It involves review and verification by buyers of the information supplied by the sellers. Things to investigate in a due diligence include the business’ ability to make profit, condition of equipments, ownership of important assets and documents or presence of any potential competitors nearby.
How To Start Due Diligence?
Legal due diligence in Australia generally confirms title to a number of things like shares in a company or assets in a business, legal structure, terms of financial obligations with law. Seller due diligence is related to highly regulated businesses. It is better for a customer to do his own due diligence process, which is generally more detailed than seller due diligence process.
But, you can have a formal approach of creating a due diligence team with experienced people expert in law and finance. In the team, you are expected to have an account advisor, a due diligence lawyer and a business advisor or broker. The team will review the business’ records, give you valuable advice on the business’ suitability of making profit and make you aware about potential risks.
What Is The Due Diligence Timeframe?
Due diligence occurs as soon as you enters into the sale contract. But you can also have a designated due diligence period mentioned in the contract. Situation may arise when you have to terminate the contract because of uncovering of something that may hinder success of your business.
How Does A Due Diligence Process Work?
There are certain steps that constitute the whole process of due diligence.
Where Do You Get Information About The Companies?
As it is important and mandatory to know valuable information about the companies, you must look for those on appropriate platforms. Australian companies are bound to share some details like solvency status, share capital, details of directors to Australian Securities and Investments Commission (ASIC). This information can be found on the website. If you want to know about charges held against a company that include against assets held by a company, you can look into the Personal Properties Securities Register.
The information about ownership of real property, mortgages, charges and other attributes are accessible at the land registry office of each state and territory of Australia. Last but not the least, if you want to know about registered intellectual property like patents and trademarks, look into IP Australia, which is Australia’s intellectual property rights administrator.
While purchasing a business, risks are mostly inevitable. That is why, you need good lawyers who can help you in reducing risks by convincing the sellers to reduce the price in case uncovering of issues or by asking for warranties. Commercial Lawyers Perth can help you in finding experienced commercial litigation lawyers in Perth.
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