There are several things a potential buyer should look out for when purchasing or selling a business with a liquor license. These things are not always obvious but are particularly important in ensuring a smooth transaction.
Oftentimes, businesses rely solely on the business broker to cover all issues in the contractual process of purchasing or selling a business with a liquor license but doing so often fails to recognise many risks and liabilities that would be reviewed by legal and financial advisors. Involving financial and legal advisors early is key to covering the following issues and more, which are often hidden until after the transaction is finalised or on the verge of being finalised:
1. Is the sale classed as a going concern for GST purposes meaning that it is exempt from GST?
2. What are the Landlord future plans with the property, are they going to want to re-develop in the near future?
3. Is the business type allowed under the terms of the lease and importantly under local government planning schemes?
4. Has the Seller kept up with local government health and safety requirements?
5. Does the Lease contain the necessary protections for a hospitality type tenant and is there a time-frame left on the lease to make a purchase viable?
6. Will the current Liquor License transfer over for the use of the new business or will further applications need to be made to liquor licencing?
7. Does the Vendor own or finance the assets of the business which are included in the sale?
8. Has a fire audit been conducted recently?
9. Is the building and all its associated systems updated and in good working condition?
10. Are any staff included in the contract and if so are their entitlements being correctly adjusted?
The above is just the tip of the iceberg of potential issues in a transaction of this nature. Miller Sockhill Lawyers Buderim is a group of solicitors based in the Sunshine Coast that specialise in all matters of hospitality law.