Purchase of a Liquor Licensed BusinessPLEASE NOTE: We do not apply for liqour licensing on residential stands (at your house) - Click on Rights for further information.
The contract for the purchase and sale of a business can save expensive litigation. It can also eliminate misunderstandings and conflict between the buyer and the seller.
The three basic Sales Agreements for businesses are:
These are specialized contracts and each contract is unique to its circumstances. Unless advised by the purchasers Accountant, do not take an uncalculated risk and take over the Member`s Interest and Loan Account of the seller`s Close Corporation. You can be held liable for the sellers debt.
V. A. T. on the purchase of a business.
The Sale can be structured in such a way that it does not attract V. A. T. on the purchase price. Always deal with competent Business Brokers and Accountants who will assist the buyer and seller in dealing with such matters and in terms of the law.
Stock included in the purchase price.When stock is included in the purchase price the buyer must take care. The Sales Agreement must clearly state if the stock is calculated at:
The buyer must realize that that the stock at the effective date (hand over date) may not be fast moving stock. The buyer must therefore provide for the purchase of additional stock.
Advertise the sale in terms of Section 34(1) of the Insolvency Act No. 24 of 1936.
On the Sale of the business it is advisable to publish a notice in terms of Section 34 of the insolvency act so that by the effective date (hand over date), a period of 30 (thirty) to 60 (sixty) days will have elapsed since the publication. Without such notice creditors with valid claims can influence the transaction and lodge a claim.
A specialist in the field of the Liquor License must be consulted prior to signing the Sales Agreement. The consultant can make sure the license is valid and that it can be transferred to the buyer.
Restraint of trade.A restraint of trade that is reasonable must be imposed upon the seller to prevent the seller from opening a similar business and unfairly compete with the sold business.
Employees of the Business.Take note of the Labour relations act which deals with the transfer of employee`s employment contracts from the seller to the buyer. Make use of specialists in the field of labour relations to avoid possible litigation.
Supplier`s and customer`s lists.The seller must hand over a list of suppliers and customers (if applicable) to the buyer on the effective date.
Asset list.A list of assets and equipment must form part of the Sales Agreement.
Debts and Liabilities of the business.Great care must be taken that the buyer does not buy the sellers debts and liabilities. Your competent Business Broker and accountant will assist you in this regard.
Debtors and Creditors.The decision on the debtors and creditors must be stipulated in the Sales Agreement. It is best to exclude same.
Invest in utilizing specialists in your business. Remember the most dangerous person is one who does not know, that he does not know. You may phone us for free advice on the purchase of your licensed business.
Frik Liebenberg of Frik Liebenberg Business advisory Services cc 99/05522/23 has been a Business Broker since 1997 and a Liquor License Consultant since 2002. Feel free to contact us for further information.
Frik Liebenberg Business Advisory Services cc 99/05522/23
082 556 8368