Complete Business Checklist

Complete Business Checklist

Preliminary Matters to Consider

• reasons to go into business
• comparison of business with employment
• suitability of purchaser for business
• suitability of purchaser for the particular business
• financial capacity of purchaser for business

• will the business give fair income?
• will the business return investment in goodwill fixtures and fittings, equipment and stock either by resale or during the economic life of the business?
• will the business give interest on invested capital?

• inspection of premises, fixtures, fittings and equipment
• inspection and valuation of stock
• inspection and valuation of work in progress
• inspection of vendor's tax returns
• inspection of vendor's books of account
• inspection of vendor's wages book
• inter-firm comparisons (statistics on businesses)
• economic life of business, e.g. lease, competitive products, competitive businesses, etc.
• special factors which contribute to success of business, e.g. popularity of proprietor
• techniques or skills of proprietor, location, etc.

• competitive businesses existing or proposed?
• competitive products existing or proposed?
• reliability of future trading?
• reasons for vendor selling business?
• inspect current licenses, permits, business name
• authority of vendor to sell business registration certificate, patents, copyright, trademarks, etc.
• inspection of contracts for current or future work with customers

• terms and conditions of contract
• price

• check authorities as to permitted use

• rent
• rights of assignment
• term of lease
• options for renewal
• enforceability
• rent reviews
• permitted use
• convenient to repair
• responsibility for
• outgoings
• any previous defaults
• insurance
• subletting

• full name
• address - owned or rented?
• bank
• references
• if vendor is a Company, perform a Company search

• security
• sources of finance
• best source of finance for the business, e.g. overdraft, hire purchase, lease, fully drawn account, interest-only 
   

Contract of Sale

• contract is prepared by the vendor's legal representative
• vendor is to be advised of the clauses the purchaser requires to be in contract
• proposed contract to be discussed with your legal representative who is instructed to check or draft wording suitable to the purchaser's requirements
• relevant clauses include:

• work in progress, assessment and valuation
• fixtures, fittings and equipment which vendor owns and warranty that nobody has interest therein
• fixtures, fittings and equipment which are leased by vendor
• right of assignment of leased fixtures, fittings and equipment
• list of books to be assigned
• adjustment of outgoings and statutory charges under the lease
• restraint of trade clause, check:

• transfer of business name, copyright, trademarks, patents
• transfer of phone service
• vendor to supply information:

• vendor required to work in business for a changeover period of time?

• search business name
• title search of premises
• shopping centre outgoings, e.g. cleaning accounts, and etc.
• Land Department
• local authority (municipal council or shire)
• water supply authority
• local sewerage authority
• trademarks, designs, copyrights and patents
• government departments - other relevant licenses, registrations and permits

• vendor to show documents (as noted above under preliminary matters)
• vendor to supply

• purchaser/landlord prepares proposed assignment of lease
• purchaser obtains title search - if applicable
• purchaser obtains search of business name and/or company name

• vendor to supply signed contract
• purchaser to return signed copy of contract to vendor
• purchaser to pay preliminary or full deposit
• vendor to supply receipt for deposit

• application for certificates from authorities (see list of formal searches above)
• purchaser prepares and supplies to vendor

• purchaser prepares adjustment statement - outgoings

• executed assignment of lease
• lessor's part of lease;
• signed consent to transfer of phone service
• signed transfer of business name, trademarks, patents and copyrights
• finance companies' consent to transfer fixtures, fittings and equipment on lease or Hire Purchase lease
• documentation re fixtures, fittings and equipment
• permits, licences and certificates
• keys to premises

• balance of purchase price/first instalment
• adjustment statement

• applies for transfer of phone
• lodges application for transfer of registration of business name, copyright, trademarks, patents, etc.
• pays stamp duty on assignment of lease
• applies for all necessary permits, licenses, registrations and certificates which are personal to proprietor