Business Buyer’s Remorse:
What to do?

Business Buyer’s Remorse: What to do?

So, you bought and settled a business acquisition either by buying the business outright or through a sale of shares by 30 June this year.

However, you are now getting the feeling that something is not right.

What should you do?

The law assists in a number of ways through causes of action either in misleading or deceptive conduct, breach of contract or negligence.

The critical thing though is to first analyse what has gone wrong on a forensic level.

Here are some tips for the early management of your suspicion that you might have bought an under performing business or shares in such a business.

1. Do not make any immediate changes to the business if you think something is wrong. Any changes made might have adverse repercussions in an argument later.

2. Preserve records that were given to you which were part of your decision-making to buy the business.

3. Speak to and where possible get statements from staff that you have acquired as part of the business acquisition, or if the acquisition was done by the sale of shares, then the share acquisition. Get them to speak to any performance issues regarding the business. Keep a record of what they say and the time they said it. If they give a statement get them to read it, sign it and date it.

4. Speak to somebody with suitable industry experience about the gross profit margins and the performance of the business as you are encountering it. Do some top-level analysis comparing similar businesses and publicly available statistics and numbers relating to those businesses.

5. Bring in to an external independent accountant who actually understands the industry and numbers in order do a preliminary assessment of the business. That party might guide you and say you might need more time and it may be that the issues might have to mature. However, the earlier you consult a forensic accountant the earlier you can manage the process.

6. If, after these initial assessments you still have cause for concern, immediately consult a lawyer. Court action might be necessary to address the problem. Court action generally though is a measure of last resort. Consulting a lawyer early will help manage the facts and the issues so that the case will be put in optimum condition ready for a dispute.

7. Do not simply pull out of the business or abandon the shares. Getting out of an under performing business is a managed process and, if poorly managed, you could end up with liabilities to suppliers and landlords which are merely compensable by way of damages in a court case later on.Until that court case is resolved they may remain an immediate liabilities to you.

8. If you have any questions about this contact us on [email protected] or (08) 9420 8100


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