In the past we've touched on some tips to keep in mind when selling a business, but what about when you're on the other side of the transaction? When preparing to purchase a business, early consideration of licencing requirements is essential. The last thing you want to discover after completing a purchase of business transaction, is that you are unable to operate due to an invalid licence or permit.
Planning ahead, being informed and knowing your obligations is key before acquiring any business. As a wise man (Benjamin Franklin) once said, “By failing to prepare, you are preparing to fail”.
Types of licences
The types of licences that are required will vary depending on the nature of the business. It is also important to consider the potential issues that may impact the acquisition of necessary licences.
Some of the Key areas subject to permits and licences are:
- Impacts on the environment
- Importing and exporting
- Workplace health and Safety
- Industry specific activities (eg: Building, Food and Liquor)
Important things to consider
- Validity – ensuring that all licences, permits and approvals are valid, current and fit for purpose.
- Transferability – determine whether any licences are transferable or whether new licences must be issued.
- Pre-purchase inspection (PPI) – obtaining a report to determine whether any items fail to comply with Council requirements.
PPIs are particularly important in respect of food businesses as they can minimise future costs and prevent delays leading up to settlement. PPIs are arranged and conducted by the Council and are often a prerequisite for a licence transfer. Generally, the purchaser pays for the PPI and the Vendor covers the costs of rectifying any non-compliance issues.
Acquiring a licence is only a job half-done (half-done jobs grind the BlueRock gears and we don’t like them), ensuring continued compliance is of equal legal importance. It is necessary to create and develop systems so that compliance is engrained in the day-to-day practice of the business.
Every business has its own challenges and unique aspects to consider. By no means is the list of recommendations in this article exhaustive, there will undoubtedly be more considerations which are unique to your business.