Hypotheticals by Manny Wood. Published in the Coffs Coast Advocate on 16 December 2017.

Gordon and Janice are in their 50s. Their children have recently moved out of home.

While holidaying on the coast, they decide that they are ready for a “Sea Change”. They are excited about giving-up their jobs in Sydney and are looking to buy a business on the coast.

Gordon and Janice find a takeaway business that appeals to them and they make an appointment to see a local solicitor, with a good knowledge of the area.

Their solicitor informs them that the first step in the process is to undertake “due diligence”. This means obtaining copies of the business’ books to ascertain whether it is a viable venture. The solicitor recommends that Gordon and Janice retain an accountant to assist with this process. They are also advised to talk to the accountant about establishing a company or family trust to run the business.

The solicitor also recommends that Gordon and Janice talk to the employees of the business and neighbouring shopkeepers.

They are also advised to talk to their bank about obtaining finance.

In the meantime, the solicitor obtains a copy of the contract for the sale of the business that is prepared by the vendor’s solicitor. The solicitor examines the current lease, the plant and equipment disclosed in the contract, identifies continuing employees, restraint of trade provisions and advises Gordon and Janice of the proposed settlement date and penalties that may be incurred if settlement is delayed.

Janice discovers that the vendors are selling the business because they are finding it “too much”. She also discovers that another takeaway business will soon be set up nearby and finally, that according to her enquiries on social media, there are some adverse comments about the business.

After conducting due diligence and receiving the proper advice, Gordon and Janice decide not to proceed with the purchase.

Fortunately, Gordon and Janice soon find a business that is suitable and will make their “Sea Change” early in the New Year.

If you would like Manny to address a particular legal issue, send your request to manny.wood@ticliblaxland.com.au or call him on (02) 6648 7487.