Business Sale Agreement

● A business sale or purchase can be structured in a multitude of ways to ensure the following outcomes:

‍

• Minimising risk; and
• Maximising cash flow.

● We helped our client who is an IT managed services company with an annual turnover of $40 million acquire businesses several times a year.

‍

● Our role as legal advisers is to assist in minimising the risk to our client by:

‍

• Ensuring that our client is protected against any undisclosed issues with the business such as litigation or undeclared taxes by requiring the vendor provide warranties to the full spectrum of business issues which are likely to arise; and
• Ensuring that the business performs as represented by the vendor by using an earnout over 12 to 36 months and utilising a formula to calculate the price which is adjusted based on the recurring and non-recurring revenue of each subsequent year.

● By using the earnout, our client is also able to maximise cash flow by spreading the payment of the price over time, payable in accordance with the performance of the business and utilise part of the income of the business to pay for the price.

‍

‍