Category: Legal

Planning for a successful succession!

Posted on

Succession Planning is the process of planning your exit from your business on your terms.  The reasons for your exit can be many and varied, including retirement, realising the value of your investment or a change in the direction of your life.  Whatever the reason or combination of reasons that apply to you, it is important to manage this process to ensure you achieve the value you deserve and the business is in the best position to thrive after you leave.

Some of the questions you need to consider when planning for the succession of your business are:

What needs to be in place to ensure a successful succession strategy?

It is widely recommended that you consider the exit strategy to your business right at the beginning when you first start/buy your business.  This allows you to take control of your business and its direction from the very beginning, rather than being at the mercy of circumstance.

One of the most common reasons to plan your exit from the business when you purchase it is to allow for the appropriate business structure and ensure you have the best possible tax outcome.  Depending on the type of business, the risk associated with the business and your long terms plans, a trust, company, partnership or combination of these may provide the best result tax wise.  It is vital to consult with an accountant and consider the tax implications of your succession plan early to ensure you don’t miss out on any opportunities legally available to you.

Some of the more practical things that need to be considered include the lease.  You need to be familiar with the lease terms to ensure you are exiting a business that is able to trade in the same location with a new owner, as the premises generally are an essential part of any business. Knowing if the new purchaser has the ability to enter into a new lease and therefore terminate your lease agreement will guarantee you’re free of any possible liability after leaving.

If there is a liquor licence or you are selling food then applications to transfer the licence from you to a new owner can take an extensive amount of time, so should be considered very early on in the selling process. Transfer approval is subject to third party agencies and there are standards and regulations for both the premises and purchaser that need to be met.

Who will the successor be?

If you are simply selling your business, then the identity and background of the purchaser may not be of great interest to you.  Your main challenge will be attempting to get as many potential purchasers interested in a bid to obtain a good price.

If you have a family business however, there are more issues to consider.  For instance, do you have a likely successor within your family?  If so, is the successor in a position to purchase the business outright, or do you need to contemplate a purchase over a longer period of time?  Will this be considered in your will and if so, could there be a challenge or will some family members feel left out?

What are the first steps?

When planning your succession strategy, you should contact your accountant, legal advisor and financial planner in the first instance.  With their guidance you will be able to formulate a plan that puts you in the driver’s seat rather than leaving you at the mercy of the market at the time you need to exit the business most.

The information provided in this article is of a general nature only and is not intended as specific legal advice.  If you have a specific legal issue relating to the topics covered by this article we suggest that you seek legal advice.

Taking a closer look at conveyancing

Posted on

Canny Legal take a closer look at conveyancing with a few key things to make sure you go over when buying a home.

For many of us buying a house is the biggest financial transaction we will ever undertake. So it’s understandable that the conveyancing process can sometimes seem daunting, particularly for first home buyers. The size and nature of these transactions makes it essential that the purchase goes smoothly and that any issues are identified and resolved as early as possible in the process.

Some of the key things that you should be aware of when buying a property include:

  • Vendors statement – It is important to read this document carefully. Note the services connected to the property and the estimated annual outgoings, this includes council rates, to ensure these are acceptable to you.  Additionally, note the zoning and planning overlay requirements that will apply.  It is also important to make sure that all relevant planning and/or building permits have been obtained for any recent building works undertaken on the property.
  • Title and title plan – Check the certificate of title to ensure all property details are correct and that there are no unexpected charges or caveats over the property. Be aware of any easements or restrictive covenants that apply to the property. Check the plan of the property against the actual property boundaries to ensure they match. Any discrepancies should be immediately addressed with the vendor and/or their solicitor or conveyancer.
  • Contract of sale – It is critical to read this document and have a full understanding of all terms and conditions. If you are buying by private sale it is important for you to be aware of your cooling off rights. In most cases these will apply for three business days after the contract of sale is signed.  Make sure the property is properly described and additional items specified; if they’re not then you may not end up buying what you think you’re buying.  Where relevant, make the contract conditional on finance and/or an acceptable building inspection and that all dates in the contract (eg. date for payment of the deposit, finance approval dates, settlement dates) are acceptable to you and more importantly, achievable.  Don’t get trapped into an unrealistically short timeframe for settlement that doesn’t suit you.
  • Property inspections – It is crucial that you have a full understanding of the quality of the house you are purchasing. As well as your own personal inspections, you should engage an independent qualified building inspector to undertake a professional building and pest inspection to identify any structural defects, wiring and plumbing issues and other issues like infestation, rising damp and mould or the presence of asbestos.  Before settlement undertake a pre-settlement inspection, normally held one week prior, to ensure the property is being handed over to you in the same condition as when it was sold.
  • Owners Corporations – If you buy a unit, townhouse or apartment there will often be associated common property that will be covered by an owners corporation. Before buying it is important that you have an understanding of the rules of the owners corporation, the rights and responsibilities associated with it as well as the costs and fees involved.
  • Costs – Be aware and on top of all of the costs of the conveyancing process. In addition to the purchase price this includes; conveyancing fees, any pre-paid outgoings already paid by the vendor and stamp duty.

In most cases, your solicitor or conveyancer will identify and assist you with any serious issues that arise. However, if you are unsure of anything at any stage, it’s always worth clarifying with them. Their goal is to make sure the conveyancing process runs to completion as smoothly and stress free as possible for you.