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The legal world is continuously changing. As a business person without legal qualifications, it can be overwhelming. We regularly produce articles and legal news in Australia so you can get an overview of legal matters that are relevant to you.
You'll also find articles about our team, our firm, and our services, so you can get to know us better. Feel free to dig into our current library, and if you have any questions, you know who to contact - the team at Sierra Legal are waiting to help.
Buying a business? If so, you may need to think about the warranties to be provided by the seller, the limitations to those warranties that may be requested by the seller, whether there should be co-warrantors, and whether there should be a retention of the purchase price to satisfy future warranty claims…
Your decision to buy a business and your negotiations with the seller over the price and other terms and conditions of the purchase will be influenced by information provided by the seller. For example, the seller is likely to provide you with financial statements of the business. The seller may also be willing to share internal forecasts and budgets. Other information and documents relevant to the business may be disclosed by the seller as part of your and your advisers’ due diligence investigations of the financial, operational and legal aspects of the business.
It is, of course, prudent for the purchaser to check the information the seller provides for accuracy and (in relation to any forecasts and budgets provided by the seller) reasonableness. For instance, this could be done by a review or audit of the financial statements (where they are unaudited special purpose accounts) and, if possible, independent verification by searching public records and registers. However, budgetary and time constraints and the nature of much of the information provided by the seller will rarely allow you to undertake a complete investigation of all aspects of the target business, and to independently verify all information provided by the seller.
This is why it is common for the purchaser to require the seller to provide warranties about the business in the contract for the sale and purchase of the business. The warranties will generally be about specific aspects of the business and may be used to confirm information provided by the seller. If the warranties are later proved to be incorrect, or misleading (depending on the wording of the warranty provisions in the contract), the purchaser will be entitled to recover any resulting loss from the seller.
The following are some key points about seller’s warranties from the purchaser’s perspective:
Warranty limitations: The seller is likely to want to limit their exposure under the warranties. One common limitation is to seek to exclude warranty claims based on information or matters which the seller disclosed to the purchaser before the sale and purchase contract was signed (the principle being that if the seller has disclosed a risk to you before you legally committed to the purchase, you should not be able to sue them for any loss if that risk later eventuates).
Although that is not generally unreasonable, if you are prepared to accept a limitation based on seller disclosure, the extent of the limitation should be clearly stated in the contract. For example, you may want to stipulate that only full and fair disclosure of a matter which may give rise to a future warranty claim, or only full and fair disclosure against specified warranties (in a disclosure letter or similar document given by the seller before the contract is signed), will limit your right to claim under the warranties. Otherwise, the seller may argue that a general and non-specific disclosure of information during due diligence (which may have been insufficient to enable you to identify a risk of a warranty breach) will preclude you from making a warranty claim afterwards.
Other common limitations include a monetary cap on the seller’s liability for warranty claims and a time limit within which the purchaser is allowed to bring a claim for breach of warranty.
Co-warrantors: If the seller is a company, the sale proceeds may, a short time after the sale of the business completes/settles, be distributed to the company’s shareholders, leaving no more than a shell company with no, or no substantial assets. That would make a later warranty claim by the purchaser against the seller company fruitless. Therefore, you may want someone of some financial substance, in addition to the seller company, to give the warranties under the sale contract. That will often mean the directors of the seller company being required to give warranties jointly and severally with the company.
Hold-back of funds/escrow: Even so, there may be no opportunity for the purchaser to assess the financial standing of the directors or other co-warrantors when entering into the sale contract, in particular, their financial standing in the future when a warranty claim may need to be made. To ensure that there will be some funds readily available to meet a claim later on, you may try to negotiate for some of the sale price to be held back at completion/settlement, or placed in escrow (i.e., held by a third party stakeholder or your lawyer in trust), for part or all of the warranty period.
If you have any questions on seller warranties, or any other legal aspect of buying or selling a business, please do not hesitate to get in touch with one of the Sierra Legal team.
Recent updates involving the Unfair Contract Terms regime in Australia are a reminder to regularly review and update any standard form/template contracts used in your business to ensure compliance with that regime.
Unfair Contract Terms regime
The Unfair Contract Terms regime in the Competition and Consumer Act applies to "standard form contracts" which are either "consumer contracts" or "small business contracts". If a court or tribunal finds that a term in these types of contracts is ‘unfair’, the term will be void (i.e. the term will not be legally binding on the parties). The rest of the contract can continue to bind the parties to the extent it is capable of operating without the unfair term. For further background on the unfair contract terms generally, you can read our previous article on this topic.
Recent updates
Updates/consultations in relation to the Unfair Contract Terms regime include:
Fuji Xerox case
We previously wrote (October 2020 Article) about the ACCC’s legal action in the Federal Court against Fuji Xerox Australia, where the ACCC alleged that Fuji Xerox’s template/standard form contracts included contract terms (including automatic renewal terms, excessive exit fees and unilateral prices increase) that were unfair under the Unfair Contract Terms regime in the Competition and Consumer Act.
Fuji Xerox applied for a summary dismissal of the ACCC’s case on the basis that the contracts in question were merely template contracts and the ACCC’s case did not identify or focus on any actual contract between Fuji Xerox and a particular customer.
In March 2021, the Federal Court of Australia rejected Fuji Xerox’s application for summary dismissal. Although a final decision has not yet been made on whether the terms in Fuji Xerox’s template contracts are actually unfair under the Unfair Contract Terms regime, the activity involving the Fuji Xerox case (as well as the ACCC consultation) is a good reminder to ensure any standard form or template contracts are regularly reviewed to ensure that they do not contain any terms that could be considered to be unfair under Unfair Contract Terms regime.
If you have any questions on unfair contract terms and how they apply to your business please get in touch with one of the Sierra Legal team.
Congratulations to Kenneth Gitahi on his promotion to Director and Samantha Khoo and Troy Mossley on their promotions to Special Counsel.
Ken, Sam and Troy all specialise in mergers & acquisitions, shareholder arrangements, IPOs and other capital raisings, private equity investments, and general corporate and commercial advice and have been invaluable members of the Sierra Legal team!
Joint ventures/business arrangements are commonly structured as proprietary limited companies with 2 or more shareholders. While it may not seem essential at the start of the business relationship, having an agreement between the shareholders has a number of key benefits. The following are a few key issues to consider prior to having a shareholders agreement prepared:
Joint ventures/business arrangements are commonly structured as proprietary limited companies with 2 or more shareholders. While it may not seem essential at the start of the business relationship, having an agreement between the shareholders has a number of key benefits including:
If you require a shareholders’ agreement, it is important that it is tailored to the shareholders, to the business, and to the future plans of the company. The following are a few key issues to consider prior to having a shareholders agreement prepared:
Structure of the agreement: Consideration should be given to the short to mid-term plans of the company as this may impact the terms and structure of the agreement. For example, if it is expected that the company will look to raise funds by issuing ordinary or preference shares to parties other than the existing shareholders, the agreement should be appropriately drafted so that amendments are not required at the time of issuing those shares.
Decision making: How will decisions of the company and the business be made? For example:
Funding and share issues:
Transfer of shares:
Employment arrangements:
Restraints: Restraints are provisions that protects the business if any shareholder leaves. Care must be taken to ensure these provisions are not drafted in a way that may result in them being unenforceable or contrary to law (e.g. under the cartel/exclusionary provisions in the Competition and Consumer Act 2010 (Cth)).
Resolution of deadlocks:
If you have any questions on shareholders agreement or need a shareholders agreement prepared for your company, please do not hesitate to get in touch with one of the Sierra Legal team.
If you’re not in the business of supplying to retail consumers, you could be excused for thinking that the consumer guarantees under the Australian Consumer Law (ACL) were not something you needed to worry about.
However, given the definition of “consumer” in the ACL, the consumer guarantees already apply to a number of business to business transactions (in addition to business to retail consumer transactions), and from 1 July 2021 they will apply to a lot more.
If you’re not in the business of supplying to retail consumers, you could be excused for thinking that the consumer guarantees under the Australian Consumer Law (ACL) were not something you needed to worry about.
However, given the definition of “consumer” in the ACL, the consumer guarantees already apply to a number of business to business transactions (in addition to business to retail consumer transactions), and from 1 July 2021 they will apply to a lot more.
The definition of “consumer” already applies to supplies (including to business customers) of goods and services:
but from 1 July 2021 the $40,000 threshold will increase to $100,000.
This means that any business that supplies goods or services to another business where the value of those goods or services is less than $100,000 will need to comply with the consumer guarantee regime in the ACL.
(There is no change to the exclusions from this regime, including for goods purchased for re-resupply or use in production or manufacture.)
There are 9 consumer guarantees that apply to goods and 3 consumer guarantees that apply to services. These include, for example: guarantees for goods relating to acceptable quality, fitness for purpose and compliance with express warranties and guarantees for services relating to fitness for purpose and being performed with due care and skill.
Among other available remedies, “consumers” (including business customers) can potentially claim uncapped compensation from a supplier (including for consequential losses) if they suffer loss or damage as a result of breach of a consumer guarantee (for example, for business losses resulting from goods or services that are found not to have met a guarantee relating to fitness for purpose.)
In many circumstances, however, a limitation of liability clause that meets the very specific requirements of the Australian Consumer Law can be effective.
Sierra Legal can assist by reviewing your standard terms to ensure that an appropriate limitation of liability clause is in place and advising on the consumer guarantees and other relevant obligations under the Australian Consumer Law.
It is now six months since Senior Consultant, Michael Abrahams, joined us in a part time capacity (while continuing his other role as General Counsel, Company Secretary & Integrity Officer at Essendon Football Club). We sat down with Michael to talk about his observations on returning to private practice after almost 15 years as an in-house lawyer...
It is now six months since Senior Consultant, Michael Abrahams, joined us in a part time capacity (while continuing his other role as General Counsel, Company Secretary & Integrity Officer at Essendon Football Club).
We sat down with Michael to talk about his observations on returning to private practice after almost 15 years as an in-house lawyer.
What are the key differences between working in-house and advising clients in private practice?
As an in-house lawyer, you have a range of internal clients, but you are a part of the organisation itself, so you develop a deep understanding of the organisation, its priorities and how it thinks and you also have an opportunity to influence and improve the organisation from the inside.
Private practice lawyers aren’t usually embedded in the client’s business in the same way, but you do get the opportunity to work with a wider range of clients in different industries and have the benefit of working alongside other senior lawyers (which you don’t necessarily get to do in-house).
Based on your experience, are there opportunities for businesses and their lawyers to get more out of the relationship by thinking in different ways?
Absolutely! In my experience, businesses often look at contracts and other legal matters on an individual basis and only involve their lawyers when more significant matters come to their attention.
Sometimes these matters take up a lot of legal resources and can arise when the client is already practically committed to the transaction (so are no longer in the best bargaining position).
Alongside this, the business will inevitably be entering a significant number of other contracts all the time (which may not be very formal or obvious, such as when buying on a supplier’s terms) and these might get no attention from a legal or risk perspective.
I think there is huge scope for businesses to address this by using the right external lawyers to help them identify their true key risks and create the systems, procedures and templates to address them in a systematic and efficient way. Technology can play an important role in this and it’s exciting that at Sierra we are able to offer an extra element to this service through our contract automation service, Arreis Automation.
Personally, moving back into a private practice as a senior lawyer, it’s great to have the opportunity to take what I have learned in-house and make a difference for a range of clients and not just my one employer.
Sierra Legal is pleased to announce that Davide Cavalleri has joined the firm as Special Counsel.
Davide is a highly experienced corporate and commercial lawyer who specialises in mergers and acquisitions, corporate advisory and general commercial law.
As part of Davide joining the team, we ask him all the tough questions …
Sierra Legal is pleased to announce that Davide Cavalleri has joined the firm as Special Counsel.
Davide is a highly experienced corporate and commercial lawyer who specialises in mergers and acquisitions, corporate advisory and general commercial law.
As part of Davide joining the team, we ask him all the tough questions…
What were you doing before Sierra Legal? I was a special counsel in the corporate/commercial team in a mid-tier firm. Prior to that, I was a principal in a smaller boutique commercial law firm in Melbourne. I also owned and ran a small manufacturing business for a time in between, which got me out of the legal ivory tower – it helped me appreciate a little what some of our business clients have to deal with on a daily basis.
What do you do with your time when you aren’t advising on M&A deals and reviewing contracts? I took up running about 12 years ago. I really enjoy it, both to keep fit and as a form of stress release. I also like pottering about the garden, although that can be a challenge with Melbourne’s weather.
What was your first job? A sales clerk in an electrical components wholesaler. After a while, I knew the names and specifications of a vast quantity of stock items, without having a clue as to what most of them were actually used for.
What was the last book you read? “A Promised Land”, Barack Obama’s memoir.
Favourite place? Port Douglas, in far north Queensland. As a Melbournian, I suspect I’m not alone in saying that. There are plenty of ex-southerners living up there!
Favourite food? I confess I have a soft spot for a good pizza. I limit my intake these days though, as it has to be followed up by a very long run to burn off the calories!
Least favourite food? Dairy and cheese (although I make an exception where it’s a pizza topping).
If you were stranded on a desert island, what 3 things would you want with you? A satellite phone and 2 fully charged backup batteries, so I can call for help and be rescued.
Best advice you have received? “To live in the moment”. It’s easier said than done, though.
Welcome to the team Davide!
Please see our top legal tips when buying a business….
Tip 1: Know what you are buying – shares or assets
Most people operate their business through a company. This means that a buyer can either buy:
However, if the business is operated by a sole proprietor or through a trust, then the buyer may be limited to buying just the assets.
The difference between a share purchase transaction and an asset purchase transaction is that:
The decision on whether to buy shares or assets may become clearer after undertaking due diligence on the target business. There may also be tax reasons why a buyer may to prefer to purchase shares over assets or vice versa, and a buyer should speak to its accountant about this at the outset.
Tip 2: Negotiate an exclusivity period with the seller
If possible, a buyer should try to negotiate for an exclusivity period during which the buyer has the sole right to conduct due diligence on the target company and business. This is intended to prevent the seller from trying to solicit other offers from (or negotiate with) other prospective buyers during the exclusivity period.
Tip 3: Understand your funding options
Before starting the acquisition process, a buyer should consider how it will fund the proposed acquisition (cash, debt finance from a financial institution, or possibly vendor finance).
If a buyer needs to get a loan to fund the acquisition, the lender may wish to take security over the shares or assets of the target business and review the due diligence on the target business.
Tip 4: Undertake due diligence
Due diligence is essentially an investigation into (and an appraisal of) the target business/company, to assess its assets, liabilities and commercial potential.
From a legal perspective, this would include things like reviewing the business’ material contracts, funding and borrowing arrangements, any current litigation, records of any employees and their entitlements, and conducting searches on any land or buildings owned or occupied by the target business.
A buyer will usually also want to do financial, commercial and possibly tax due diligence on the target company or business (and should speak to their accountant about this).
Due diligence is important because:
The level of due diligence on the target business will depend on a number of factors including the value of the acquisition and the buyer’s experience in the relevant industry. Please see our recent article for top tips when conducting due diligence.
Tip 5: Understand what protections you may need in the documents as a result of due diligence
If the buyer still wants to proceed with the purchase after conducting initial due diligence, the next step is to prepare, negotiate and enter into definitive transaction documents to formalise the proposed sale and purchase of the target. Sometimes a term sheet or heads of agreement is entered into first for the parties to agree on the key terms that will appear in the definitive transaction documents.
A buyer will need to understand any material issues arising from due diligence to translate those issues into protections sought by the buyer in the sale and purchase agreement. Examples of buyer protections that are often included in a sale and purchase agreement include:
If you have any questions on buying a business, undertaking legal due diligence or would like assistance with conducting legal due diligence on a target business, please do not hesitate to get in touch with one of the Sierra Legal team.
Some interesting commentary and insights on mid-market M&A in Australia in 2021 in the latest Mergermarket publication
Some interesting commentary and insights on mid-market M&A in Australia in 2021 in the latest Mergermarket publication.
We agree with the sentiments in the publication - despite interesting conditions in 2020, during the second half of the year we advised on a number of M&A/private equity transactions occurring across various industries.
The main drivers for these transactions seem to be: (i) owners of businesses that have solid fundamentals (despite current market conditions) seeing it as a good opportunity to exit their business (with buyers equally seeing it is a good opportunity to buy); (ii) competing businesses merging to achieve cost efficiencies and greater stability; and (iii) companies seeking private equity investment for stability and future growth.
If you have any questions on the sale of your business (or if you are a buyer, on buying a business), please get in touch with the Sierra Legal team.
Before buying a business, it is recommended that the buyer undertakes due diligence on the target business. In conducting due diligence, a buyer should aim to know as much about the target business as it does about its own business. The following are some key tips to keep in mind when conducting due diligence on a target business:
Before buying a business, it is recommended that the buyer undertakes due diligence on the target business. In conducting due diligence, a buyer should aim to know as much about the target business as it does about its own business.
The following are some key tips to keep in mind when conducting due diligence on a target business:
If you have any questions on buying a business, undertaking legal due diligence or would like assistance with conducting legal due diligence on a target business, please do not hesitate to get in touch with one of the Sierra Legal team.
Are you tired of working in a typical “ivory tower” law firm, or the constant pressure of personal fee budgets? Do you want to be part of a dynamic and growing team with genuine flexibility around work location and hours?
Are you tired of working in a typical “ivory tower” law firm, or the constant pressure of personal fee budgets? Do you want to be part of a dynamic and growing team with genuine flexibility around work location and hours?
Sierra Legal is a boutique legal practice that was formed 10 years ago. Our current clients, to name a few, include Bingo Industries, Bulla Dairy Foods, Chubb Insurance, Clark Rubber, Edison Growth Fund, Energy Power Systems Australia, Hisense, Medibank, Simoco Wireless Solutions, Straight Bat Private Equity and World Vision Australia.
We have offices in Melbourne and Brisbane, but when our lawyers are not out seeing clients, they are often working from home offices and communicating regularly with each other online. All our lawyers have come from large firms (including Middletons/K&L Gates, McCullough Robertson, King Wood Mallesons and Clyde & Co) and share a common desire to practise law in a far more flexible workplace environment, but still being part of a friendly, supportive team that does interesting, high quality legal work. Unlike most if not all other law firms, we do not have personal fee budgets, but are instead focused on the customer, by delivering top-quality and commercially focused legal services for our clients.
Another unique feature of Sierra Legal is its document automation service offering, Arreis Automation. This involves us coding and hosting bespoke web apps for our clients, which enables them to automatically generate their own contracts and other documents themselves from Sierra Legal’s online software platform (see https://www.sierralegal.com.au/arreis).
Importantly, over the last 10 years, Sierra Legal has demonstrated an extraordinarily high retention rate with its team members, in that only 2 of our lawyers have left the business during that period!
We are looking for a talented Melbourne based corporate/commercial lawyer to join our growing team at Senior Associate or Special Counsel level, to work on a broad range of complex and interesting M&A, corporate and commercial matters.
You will be working within a close-knit team of experienced commercial lawyers, principally in some or all of the following areas:
We are seeking candidates who possess an outstanding analytical mind, strong interpersonal and communication skills, excellent drafting skills, attention to detail, personal integrity, self-motivation and the ability to work as part of a close-knit team.
If you would like to be considered for this exciting and unique role, please email your CV in confidence to careers@sierralegal.com.au
Happy New Year!
We are excited to be back in 2021 to continue providing exceptional, commercially focused legal services to our clients in the following areas:
Happy New Year!
We are excited to be back in 2021 to continue providing exceptional, commercially focused legal services to our clients in the following areas:
✔️️ M&A (including buying and selling companies and businesses).
✔️ Shareholder transactions (including shareholder agreements and joint ventures, private equity transactions and IPOs).
✔️ Corporate advisory (including Corporations Act and ASX Listing Rules advice).
✔️ Commercial law (including customer and supplier contracts, IT and IP licences, outsourcing contracts and finance arrangements).
If you are thinking about engaging in a corporate/commercial transaction in the next 12 – 18 months, please do not hesitate to get in touch with one of the Sierra Legal Team, as it is never too early to have an initial discussion.
For further information on us, our experience and some of the innovative products we offer, please also see:
📢 https://www.sierralegal.com.au/what-we-do and https://www.sierralegal.com.au/experience for further details on our legal services, flexible fee arrangements/products and our experience; and
📢https://www.sierralegal.com.au/arreis on our innovative legal automation platform, Arreis Automation.
We look forward to working with you in 2021!
We would like to wish all of our clients, colleagues, referrers, connections, family and friends a happy festive season and a big thank for your continue support during 2020!
We look forward to continuing to work with everyone in 2021.
As part of our team Q&A, we recently sat down with Senior Associate Samantha Khoo to ask all the tough questions …
When did you start at Sierra Legal? I started at Sierra Legal in February 2014.
What were you doing before Sierra Legal? I was living and working in London as a Senior Associate in the Corporate team at SJ Berwin LLP (now King & Wood Mallesons) in London.
What is the most exciting thing you are working on right now? I am working on some commercial agreements for a business that, amongst other things, provides some very cool drone equipment and services for cinematographic use (including for movies like Thor Ragnarok and Aquaman).
What do you do with your time when you aren’t advising on M&A deals and reviewing contracts? I have 2 daughters who keep me very busy outside of work. I’m currently also in the middle of a home renovation project and I provide some company secretarial assistance to a not-for-profit accelerator for early stage start-ups in the Agricultural and Food sectors in Australia. I also like swimming, bike riding, yoga, gardening and doing Just Dance with my girls.
What was your first job? Waitressing for a couple of Malaysian restaurants in Brisbane.
What was the first thing you bought with your own money? I don’t remember but I’m sure it would have been some sort of fashion item – maybe a purse or a pair of shoes!
What was the last book you read? The Secret Commonwealth by Phillip Pullman. Before that, I also started reading Homo Deus (A Brief History of Tomorrow) by Yuval Noah Harari, but I haven’t finished this one yet – it’s interesting but a bit dry.
Favourite place? My favourite city that I’ve visited is Istanbul. Otherwise, I love any place with a good beach.
Favourite food? Too difficult to choose just 1 – my top 3 would probably be Malaysian Fried Kueh Teow (a fried, flat noodle dish); Malaysian egg and onion roti canai with lamb curry; roast chicken or roast pork (with yorkshire pudding, veg and gravy). The first 2 are from growing up in Malaysia and the last choice had to go on the list because when I was pregnant with my first daughter in London, I went off all Asian food and kept craving roast (particularly roast chicken) and 3 veg!
Least favourite food? Japanese natto (fermented soy beans). I lived in Japan for a year after I graduated from Uni and I could never bring myself to have more than a taste – I don’t like the texture.
If you were stranded on a desert island, what 3 things would you want with you? An oasis, veggie seeds and some music. It might be nice to be stranded there for awhile if I had these things!
Best advice you have received? Not really advice but a quote I once read, which seems to have a number of variations but is essentially as follows – a person really only needs 3 things in life to be happy: something to do, someone to love, something to look forward to!
On 19 November 2020, ASX released Compliance Update no. 10/20 to announce the expiry, on 30 November 2020, of the temporary capital raising relief measures that had been introduced to assist ASX-listed entities affected by the COVID-19 pandemic to undertake emergency capital raisings.
On 19 November 2020, ASX released Compliance Update no. 10/20 to announce the expiry, on 30 November 2020, of the temporary capital raising relief measures that had been introduced to assist ASX-listed entities affected by the COVID-19 pandemic to undertake emergency capital raisings.
Previously, these capital raising relief measures had been updated with effect from 23 April 2020, extended until 30 November 2020, and further updated on 15 September 2020 as a result of the ongoing stabilisation in market conditions.
However, following recent consultations by ASX with ASIC and other industry stakeholders, ASX confirmed in Compliance Update no. 10/20 that the temporary capital raising relief measures will expire on 30 November 2020.
A listed entity seeking to rely on these capital raising relief measures is required to (among other things):
A copy of Compliance Update no. 10/20 can be found here.
Sierra Legal welcomes Michael Abrahams to the team as a Senior Consultant.
In conjunction with his work for Sierra Legal, Michael will also continue as General Counsel, Company Secretary and Integrity Officer at Essendon Football Club.
Welcome Michael!
Buying a business normally involves a substantial amount of due diligence by the buyer on the target business. Before committing to the transaction, the buyer will want to ensure that it knows what it is buying, including what obligations it is assuming, the nature and extent of the target businesses contingent liabilities, problematic contracts, litigation risks, and intellectual property issues.
In our experience, there a few key matters that buyers don’t want to see when they are undertaking due diligence:
Buying a business normally involves a substantial amount of due diligence by the buyer on the target business. Before committing to the transaction, the buyer will want to ensure that it knows what it is buying, including what obligations it is assuming, the nature and extent of the target businesses contingent liabilities, problematic contracts, litigation risks, and intellectual property issues.
As such, it is important for a seller to have all of their business records and documentation up to date, so that a buyer can obtain a good understanding of the business and to minimise the risk of a buyer undervaluing the business or not proceeding with the acquisition.
In our experience, the following are a few key matters that buyers don’t want to see when they are undertaking due diligence:
Whether the above are critical to a buyer will depend on the nature of your business, the purchase price, and the risk appetite of the buyer. Many of the above items can also be corrected or managed before you proceed to offer your business for sale.
If you are a business owner who is considering selling your business and you are concerned about whether there are any issues or gaps with your records and documentation, you may consider arranging a legal audit of your business prior to it being offered for sale. If a legal audit is of interest, please get in touch with one of the Sierra Legal team.
We are growing!
Sierra Legal is proud to announce that Michael Abrahams, a highly regarded commercial lawyer, is joining our expanding law firm.
We are growing!
Sierra Legal is proud to announce that Michael Abrahams, a highly regarded commercial lawyer, is joining our expanding law firm.
Michael has been the General Counsel, Company Secretary and Integrity Officer at Essendon Football Club since 2014, and is excited to be sharing this role with his new part-time position as a Senior Consultant at Sierra Legal.
Michael’s broad range of experience as the General Counsel at Essendon will add a valuable dimension to the suite of legal services that Sierra Legal provides its clients, particularly those clients who themselves have in-house legal teams or are looking to outsource part or all of their legal function. Michael's unique skills and position as a practising in-house lawyer who "knows what the client thinks", will further enhance the Sierra Legal unique offering and client promise - top quality legal advice, that is commercially focused, on time and reasonably priced.
Michael’s passion for legal drafting, and developing systems that result in more efficient and effective legal and commercial outcomes, will also be put to good use as part of Sierra Legal’s innovative and cutting-edge document automation service offering, Arreis Automation.
Welcome to the team Michael!
We are delighted to have assisted DWM Solutions and its founders and directors Nick Clift and Jeni Clift on their merger with Milan Industries.
We are delighted to have assisted DWM Solutions and its founders and directors Nick Clift and Jeni Clift on their merger with Milan Industries.
Both DWM Solutions and Milan Industries are leading IT partners in providing Managed IT, Business Continuity Solutions, IT Security, Managed Hosting, and IT Consultancy services and the new dynamic business offers clients a reliable multi-national SMB and valuable mid-market service provider for IT support.
It was a pleasure working with Nick and Jeni and we wish Nick, Jeni, Milan and their team all the best for their continued growth and success.
The ACCC has recently commenced legal action in the Federal Court against Fuji Xerox Australia with the ACCC alleging that there are 31 different terms in Fuji Xerox’s standard form contracts that are unfair…
The ACCC has recently commenced legal action in the Federal Court against Fuji Xerox Australia with the ACCC alleging that there are 31 different terms in Fuji Xerox’s standard form contracts that are unfair (including automatic renewal terms, excessive exit fees and unilateral prices increase).
You can read more about the case against Fuji Xerox in the ACCC’s press release - https://www.accc.gov.au/media-release/fuji-xerox-in-court-over-alleged-unfair-contract-terms
If you need any assistance reviewing your standard form contracts to ensure that they comply with the Unfair Contract Terms regime in the Competition and Consumer Act, please do not hesitate to get in touch with the Sierra Legal team.
The ACCC have recently made the Competition and Consumer(Class Exemption—Collective Bargaining) Determination 2020 (Class Exemption).
The ACCC has recently made the Competition and Consumer (Class Exemption—Collective Bargaining) Determination 2020 (Class Exemption).
The Class Exemption will allow small businesses, franchisees and fuel retailers to collectively negotiate with their suppliers/processors, franchisor or fuel wholesaler (respectively), without first having to seek ACCC approval (although notification to the ACCC is required).
The ACCC has advised that they will announce when the Class Exemption is ready for use, which is likely to be early 2021. Please see the recent ACCC Media Release for further information - https://www.accc.gov.au/media-release/class-exemption-will-enable-small-businesses-to-collectively-bargain. We will provide further updates as the ACCC releases its guidance for, and commencement date of, the Class Exemption.
Here are the latest updates from Sierra Legal - Newsletter.
If you have any queries about any of the articles in our Newsletter, please do not hesitate to get in touch with the Sierra Legal team.
Following our previous articles about temporary laws that were implemented because of COVID-19 to make it easier for company officers to sign documents electronically, the recent 2020-21 Budget indicates that reforms will be implemented to make these temporary laws permanent.
Following our previous articles about temporary laws that were implemented because of COVID-19 to make it easier for company officers to sign documents electronically, the recent 2020-21 Budget indicates that reforms will be implemented to make these temporary laws permanent.
The recent Budget also indicates that another welcome reform will be the permanent implementation of measures that allow companies to hold virtual Annual General Meetings.
We will provide further updates when any proposed measures become law.
We were delighted to assist CRG Operations Pty Ltd, and its directors Edward Plowman, Graeme Goldman and John Weste, on the recent acquisition of the Clark Rubber Group.
We were delighted to assist CRG Operations Pty Ltd, and its directors Edward Plowman, Graeme Goldman and John Weste, on the recent acquisition of the Clark Rubber Group.
Clark Rubber is a successful Australian retailer with a history dating back to 1946. With a national store footprint, Clark Rubber stores are specialists in pools, foam and rubber and over the past 75 years, Clark Rubber has developed into one of the most recognisable retail brands in Australia with a reputation for providing high quality customer service.
You can read more about Ed, Graeme and John here - https://www.splashmagazine.com.au/crg-operations-acquires-clark-rubber/ or visit the Clark Rubber website - https://www.clarkrubber.com.au/.
We congratulate CRG Operations on the acquisition, and wish the new owners and the Clark Rubber Management Team all the best for their continued growth and success.
If you need assistance with buying or selling a business please do not hesitate to get in touch with the Sierra Legal Team.
In our April legal update we provided commentary on temporary changes to the insolvency/bankruptcy regimes in the Corporations Act and Bankruptcy Act that were implemented to assist businesses and individuals navigate through Covid-19.
In our April legal update we provided commentary on temporary changes to the insolvency/bankruptcy regimes in the Corporations Act and Bankruptcy Act that were implemented to assist businesses and individuals navigate through Covid-19.
One of the changes was a new, temporary, ‘safe harbour’ provision so that the directors of a company that incur a debt while the company is insolvent (or the company becomes insolvent as a result of incurring the debt) will not contravene the Corporations Act and those directors will not contravene their personal duty to avoid insolvent trading. This temporary safe harbour that was to originally expire in September 2020, but has now been extended to 31 December 2020.
However, notwithstanding the extension to the safe harbour period, directors will need to be aware of the wording of the temporary ‘safe harbour’, particularly paragraph (3) set out below, and a director’s ability to rely on the safe harbour.
The temporary safe harbour provides that subsection 588G(2) of the Corporations Act (which is the duty on a director to avoid insolvent trading) does not apply in relation to a person and a debt incurred by a company if the debt is incurred:
Therefore, the wording of this safe harbour provision appears to suggest that, in addition to satisfying paragraphs (1) and (2), to rely on the safe harbour an administrator or liquidator must be appointed by the directors prior to the end of the safe harbour period. That is, the safe harbour will not apply, and directors of the company could still be liable for debts incurred during the safe harbour period, unless an administrator or liquidator is appointed prior to the end of the safe harbour period.
Please get in touch with the Sierra Legal team if you have any queries.
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