Waikato Business News November/December 2022

6 WAIKATO BUSINESS NEWS, NOVEMBER/DECEMBER 2022
Purchasing a Business:
Due Diligence Considerations
New Zealand is a country that has embraced the
entrepreneurial spirit, and this is evident in the numerous
successful Kiwi businesses operating on the world stage.
Jack Sullivan, Senior Solicitor at DTI Lawyers
Embarking in business is
exciting, but the process
of getting there can be
stressful and potentially risky
if you are not well-informed
and do not understand what is
required.
There are many important
matters to consider if you
are thinking of purchasing a
business. Your lawyer should
play a large part in the process,
advising you throughout. Their
knowledge and experience in
this area is abundant, and they
know how to foresee and deal
with problems, assist with due
diligence, and help coordinate
any finance required.
Regardless of the type of
business you are looking to
buy, your lawyer’s job is to
protect you against risk, and to
assist you in making informed
decisions while minimising
stress. Your lawyer needs to be
one of the first professionals
you contact to provide initial
guidance on the process.
This article summarises
some important considerations
that may be relevant to the
business you are looking
at purchasing. Please note
that this article does not
provide an exhaustive list of
considerations, and it is also
important to consult with a
number of other professionals
to provide guidance throughout
the purchase process.
Some important due
diligence considerations when
purchasing a business include:
• Assessing business records,
accounts receivable and
payable etc., to determine
what income the business
has generated in the past.
• Determining the ownership
structure of the business
(for example, will you
own the business as a
limited liability company,
trading trust, sole trader,
partnership).
• Assessing the age,
condition, and functionality
of the plant, equipment,
and stock included in the
purchase.
• Assessing any commercial
risks to the business,
including competitors,
suppliers and customer
contracts and relationships,
products, services, and
markets.
• Determining whether any
rezoning or redevelopment
is planned in the area where
the business is located.
• Assessing litigation and
insurance risks, and any
risks to the reputation and
goodwill of the business.
• Assessing the legal
framework of the business,
including regulatory
approvals and licences (for
example, many businesses
require certain licences or
approvals and can only be
operated by people with
certain qualifications).
• Determining the ability of
the vendor to comply with
pre-settlement and postsettlement
obligations.
• Assessing staff
relationships, staff
performance, compliance
by staff and the vendor
with respect to legal and
contractual obligations.
It is very important to
complete thorough due
diligence and consult with
your professional advisors
prior to entering into an
unconditional agreement to
purchase a business. DTI can
provide advice on the proposed
ownership structure for the
business and recommend other
professionals with appropriate
expertise to provide you with
advice on matters such as
tax and finance (for example,
accountants, finance brokers,
insurance brokers, banks).
As lawyers, we can review
or prepare the documentation
required including the
agreement for sale and
purchase of business, lease
documents, employment
agreements, franchise
agreements (if relevant), and
terms of trade.
At DTI, we have a team of
specialist lawyers commercial
and employment lawyers
available to assist you with your
business purchase. Contact us
at reception@dtilawyers.co.nz.
LEVEL 1, 131 VICTORIA STREET
120 SQM PRIME COMMERCIAL OPPORTUNITY
IN THE HEART OF HAMILTON’S HOSPITALITY
For Lease
Directly opposite the new Waikato Regional Theatre
development, this newly renovated, character filled
commercial property is surrounded by award winning
hospitality with spectacular views over the south end of
Victoria Street. Close to excellent parking options and the
Waikato Museum – Te Whare Taonga O Waikato.
This impressive vacancy is a blank canvas for a new tenant
wanting to locate amongst the action of Hamilton’s nightlife
and zoned for City Centre under the Hamilton City Council
Operative Plan. 120 sqm of office space with a small
kitchenette area located at the rear of the building. This
property is available now.
MIKE NEALE
027 451 5133
mike.neale@naiharcourts.co.nz
RA PIRIPI
021 838 887
ra.piripi@naiharcourts.co.nz
MONARCH COMMERCIAL LTD MREINZ
LICENSED REAL ESTATE AGENT (REAA 2008)
Cnr Victoria & London Streets, Hamilton 07 850 5252
Further Information Available - Enquire now