Purchase of a Liquor Licensed Business

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 Sales Agreement of a business must be drawn up by a competent person who has the knowledge and experience in Business Broking. We can assist you with advise or a sales agreement.

The three basic Sales Agreements for businesses are:

• Offer to Purchase – for Sole Proprietors.
• Offer to Purchase for Shares and Loan Account – for Companies.
• Offer to Purchase the Member`s Interest and Loan Account – for Close Corporations.

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. Contact us for Free Advice.

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 rand value of the stock calculated at cost price. (Invoices can be proof of the cost price)
• Is the stock value including or excluding V. A. T. (check invoices)

All damaged and expired stock must be excluded.

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.

Liquor License

• Make sure the Liquor License is on the name of the seller before concluding the deal. (A liquor license cannot only be held by the building)
• Make sure that the liquor license of the business you want to buy is valid and renewed by the seller.
• Insist on an original Liquor License certificate, last year’s renewal advice from the Liquor Board.
• Proof of payment of the renewal of the Liquor License.
• Make the above a condition are noted as a condition precedent in your sales agreement (that means that if these conditions have not been fulfilled, a contract has not been concluded). Specifically specify that if the conditions precedent are not fulfilled the seller must place you in a position as if no contract was signed. Contact us for Free Advice.

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.
We are Liquor License Consultants and Business Brokers and can assist the buyer and seller in the process of the transfer of a liquor license. We offer free advice on that matter.