There are still some great business acquisition opportunities out there, but how do you know that you will be getting the value and benefits in the deal that you had hoped for?
This is where your pre-contract probing into the target business’ affairs, known as due diligence, comes in. The quality and depth of the due diligence is vital, especially when it comes to assessing whether or not the contracts the business presently enjoys, and which make it an attractive prospect, are transferable to you.
‘It can come as quite a shock to purchasers of businesses that important contracts, which underpin the target business’ success might not be transferable” says Jonathan Fletcher, a solicitor in the corporate team at Tilly Bailey & Irvine LLP, based at Wynyard.
“It is certainly one of the key questions we ask when investigating a business’ affairs on behalf of a potential purchaser and the transferability of those contracts is one of the key assurances that we obtain from a seller.”