DCK ENTERPRISE NSW PTY LTD

BUSINESS INFORMATION

Buying a business

Advantages of buying a business

  • Initial setup and groundwork are already completed.
  • An established client base is in place.
  • There is an existing market for the products or services.
  • A proven financial history, which could simplify obtaining finance.

Disadvantages of buying a business

  • You may need to fulfill or renegotiate existing contracts.
  • Current staff might not be cooperative.
  •  Additional investment may be required to achieve success.

Find out more about each business structure

FREE INFORMATION GUIDE

Guide to buying a business

Purchasing an established business can be an attractive option for aspiring small business owners. Access our free guide to learn more about the steps involved in the process.

Download the Guide

Identifying the right business

Determining the “right” business depends on your individual needs and lifestyle.

Before choosing a business, ensure you:

  • Are physically, financially, and emotionally prepared for the venture.
  • Possess the necessary skills, experience, time, resources, and dedication to make the business a success.
  • Will benefit from the opportunity based on your personal circumstances.

Businesses for sale can often be found in newspapers, industry magazines, and online platforms. Accountants, business brokers, and commercial real estate agents are valuable resources. The Australian Institute of Business Brokers can help connect you with a professional broker.

Analysing the chosen business

Not every business for sale is a wise investment. It’s crucial to understand precisely what you’re paying for.

You should

  • Conduct due diligence to identify risks.
  • Have an independent valuation of the business.
  • Evaluate current employees to ensure they align with your business needs.
  • Research and comply with taxation requirements.

Due diligence and evaluating risk

Conducting due diligence is critical to understanding the potential of a business before making a purchase. This involves thoroughly reviewing the business to assess its prospects for success.

Key information to gather:

  • Certified financial statements for the past three years.
  • A balance sheet detailing assets and liabilities.
  • A list of plant, equipment, fixtures, and fittings the seller intends to include, along with current valuations and associated warranties. Confirm proof of ownership.
  • If leasing premises, a copy of the lease agreement.
  • For franchises, obtain the franchisor’s disclosure statement.

For further insights, explore DCK Enterprise’s guide on buying a franchise.

Have the business independently valued

Obtaining an independent valuation ensures you are paying a fair price for the business. Common valuation methods include:

  • Return on Investment (ROI): Net profit×100÷Price\text{Net profit} \times 100 \div \text{Price}Net profit×100÷Price
  • Asset Value: Assets of the business + goodwill
  • Market Value: Turnover × industry multiple (rarely used for retail businesses).

An independent valuation can provide clarity and confidence before committing to a purchase. Contact DCK Enterprise for guidance.

Existing employees

If staff will transfer with the business, it is essential to understand your obligations. Requirements for transferring a business and employee entitlements depend on the industrial relations system governing the industry.

  • For state-system employees, visit the Department of Mines, Industry Regulation and Safety website.
  • For national-system employees, visit the
  • Fair Work Ombudsman website.

Contact DCK Enterprise for additional advice on managing employee transitions during business purchases.

Taxation

If the business is not sold as a going concern, you must account for GST on the sale. Additionally, ensure compliance with all Australian Tax Office (ATO) requirements.

  • Consult an accountant or tax professional to understand your tax obligations.
  • Visit the ATO website for detailed information on taxation requirements.

DCK Enterprise offers guidance on taxation considerations during business acquisitions.

 

Other important points to check

When evaluating a business for purchase, consider the following:

  • Can you reasonably expect profits to remain consistent?
  • Will the profits be sufficient to cover loan repayments, maintain and replace assets, and help you recover your investment during the business’s operational lifespan?
  • What is the condition and current market value of the equipment, plant, and other assets?
  • Is the goodwill valuation of the business justified?
  • How does the profit percentage compare to industry standards?

DCK Enterprise helps you navigate these crucial assessments to make informed decisions.

Making an offer

Once you decide to purchase a business, the next step is making an offer to the vendor.

  •  Since there is no standard documentation for business purchases, you may need a lawyer to prepare a legally binding offer and acceptance if you are not working with a real estate agent or business broker.
  • Ensure all promises or commitments made by the vendor are documented in writing.
  • Your lawyer should include relevant conditions in the offer, allowing you to withdraw without penalty if the vendor does not fulfill these conditions.
  • After agreeing on the price and sale terms, arrange for the transfer of necessary licenses and registrations.

For more details, refer to the Licenses and Permits section on the DCK Enterprise website

SMALL BUSINESS HELPLINE

Need help finding the right information?

Our business advisers at DCK Enterprise are available to assist with any business-related questions or concerns.

  • Call us: 000 000
  • Book an appointment: Schedule an online or phone consultation
  • Chat online: Connect with us through our website

We’re here to support your business journey.

Other helpful resources

  • Business Skills
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