Buying a Business
I am often approached by clients looking at buying a business. Once they have identified a business and agreed a price, and then they need legal advice on the purchase process. As the transaction has a low value they don’t want to spend much on legal fees.
The basic legal position when you buy something is that of ‘caveat emptor’ – buyer beware – such that the law offers only limited protection in the event that your purchase does not live up to expectations or there is something fundamentally wrong with it. Caveat emptor puts the onus on the buyer to find out everything he wants or needs to know about the business before buying it. The main ways that you are protected in a purchase is through a thorough due diligence process, and warranties and indemnities in a purchase contract. If you do not go through that process and have the documentation in place then if there is something wrong with the business then you may have limited recourse to the seller.
Lessons to be learned
The law only provides limited protection to buyers. The best way to protect yourself during the purchase process is by having a detailed and comprehensive due diligence process, and appropriate legal documentation in place. This does incur legal fees but we can keep those as low as possible for you.