Tag Archives: buying a business

restraint of trade non-compete agreement

Restraint of trade / non-compete clauses explained

Restraint of trade/non-compete agreements are typically included in employment contracts to prevent employees from using insider knowledge to either create their own competing business or to benefit an external competitor in the industry should they choose to leave the company’s employment one day. But what role do they play in business sales? Let us explain…

When selling a business, a restraint of trade/non-compete agreement is crucial to give the buyer peace of mind when taking over the reins. How? Because these legal stipulations prohibit the seller from taking their years of knowledge, expertise, loyal customer base and employees and setting up a competing business just down the road once they have sold their business and received payment for it. If this were to happen, the result would be debilitating for the buyer, who has just spent a great deal of money on a business that is destined to struggle due to a new competitor (the previous owner). This is why a restraint of trade/non-compete clause is so critical when selling and buying a business.

What to expect in a restraint of trade clause?

For restraint of trade or non-compete clauses to be both acceptable and enforceable, they must first be seen to be reasonable. This includes the duration in which the clause is active; the radius in which it covers; non-solicitation components which cover whether the seller can employ current or past staff members of the business, as well as clients and suppliers; and much more. All these components have a large impact on the business after it is sold, so it is important to agree on the finer details of the restraint of trade/non-compete clause before settlement to ensure you (the buyer) are making a wise investment. These restraint clauses will form part of the legal contract of sale.

Examples of restraint of trade clauses

A small café may have a 2-year non-compete agreement where they cannot open a café within 5 kilometres of the existing business and cannot employ/poach/discuss any details on operations with staff, suppliers and patrons. A large-scale distribution business, however, may have a non-compete agreement that prohibits them from operating in the same business nation-wide for an extended period due to the larger investment and risk associated with the business purchase. When creating or discussing a restraint of trade agreement, it’s important to make it reasonable. Consider who the client base is and where they are located to ensure you (the buyer) are not asking unreasonable requests such as a 20-year restraint, nation-wide for a small corner store with no online capabilities. So in the event of a restraint being challenged in a court of law, the court will take into consideration all the above items and determine what is reasonable for that particular business.

Last but not least, we highly advise that all agreements and contracts be reviewed and discussed with your lawyer before signing on the dotted line. A restraint of trade/non-compete can be a highly important tool in business negotiations if done right. 

If you are looking to buy a business or are hoping to sell yours in the near future, contact Core Business Brokers today, on (02) 9413 2977, or email Roy at [email protected]. Our industry experience and knowledge will help guide you through the process, making it a pleasant journey along the way.

buying and selling a business during a covid-19 recession

Buying and selling during a recession

COVID-19. A pandemic that became a daily topic since early 2020 has rocked the world. Now, in 2021, we are still under the firm grasp of COVID but what does that mean for our business?

The 2008 Global Financial Crisis saw many businesses ‘adapt or die’ and our current recession is no different. Businesses have been faced with hard decisions and quick changes in direction in order to survive in the current pandemic climate.

But what does this mean if you were hoping to sell in 20/21? Being realistic, we know that the world will continue to feel the effects of COVID-19 in the years to come, so what does this mean if your succession plan was coming into effect within the next 3 years? What if you were hoping to retire?

But it’s not all doom and gloom. Although you may feel that selling a business or an acquisition in this current market is far fetched or not attractive, this may not be the case. Your business could be the diversification another is searching for, it could be an opportunity for a “bolt on” to another business in your industry, or it could be an opportunity for an individual to start their own journey and to step in with a fresh mindset and make the changes you feel are difficult to make with your long history in the business. Whatever the reason, there are always people who see the glass half full, instead of half empty.  Indeed, we have seen evidence that some businesses have bounced back to pre-COVID levels and are performing strongly again. As an example, we listed a small manufacturing business in October and received 36 enquiries, with 4 offers, within 3 weeks. We then had 3 qualified bidders and the business settled in February. Bottom line, if the business is performing well and is sustainable there is a healthy appetite with Buyers.

All businesses follow a lifecycle. Now this lifecycle differs between each business and the industry in which it operates, however, business buyers in unprecedented times are commonly those in the growth phase, searching for ways to improve sales, increase revenue and find that ‘secret sauce’ to profitability. For this reason, consider broadening your horizons when looking for buyers for your business. What industries are like-minded or complementary? What businesses could gain something from the acquisition of yours? Buying and selling during a recession require out of the box thinking – which lucky for you, is something we specialise at here at Core Business Brokers. Our job is to provide you with an many options as possible to achieve the best possible outcome for you.

Thinking about selling your business in 2021 and want a clear indication of the market? Considering retirement and want to know your options? Or are you looking for that secret sauce and hoping to purchase a business this year? No matter what the driving force behind your decisions, contact Core Business Brokers today, on (02) 9413 2977, or email Roy on [email protected] and we’ll get brainstorming side by side. With our years of knowledge and expertise, you’re in safe hands.

business broker

Why use a business broker?

In a world full of DIY options, ‘do it yourself’ business buying and selling sound appealing to the ever-learning, multi-tasking business owner that you are. You’ve managed to establish and grow a business of your own, maybe from scratch, maybe from one that was previously showing little profit! Either way, you’ve got this… right? Unfortunately, no. We hate to be so blunt, but there is a reason why Business Brokers exist. Actually, there are many reasons! Let’s outline a few to break the ice.

  1. Legal Guidance
    Not only do Business Brokers know their way around all necessary legal documents and agreements that feature in the business sale journey, but they are also able to explain them to you in a way that actually makes sense! Your Broker will be the middleman (or woman, so to speak) between yourself and all other parties you are dealing with; the buyer or seller, conveyancers, accountants etc. Trust us when we say, for this reason alone – they’re worth hiring.
  2. Objective third party for negotiations
    Your Broker assists the sale journey in an objective capacity. Providing advice and guidance along the way, helping with negotiations and providing clear-cut, honest feedback from beginning to end.
  3. The little black book (of Business Broking)
    Contacts and connections! Your Broker (at least if you choose to embark on your journey with us here at Core Business Brokers) is connected and experienced. Their list of contacts is extensive, and they may just know the ideal buyer or seller for what you’re after. Industry expertise can be incredibly beneficial. After all, it’s not what you know – it’s who you know (or in our case, it’s both!)
  4. Time management!
    By allowing a Business Broker to take the wheel, it allows you to focus on your day-to-day in the meantime. Whether that’s wrapping up at your current workplace or working on the business plan, you can trust that we will do our job to the best of our ability, giving you back the vital time needed to continue yours.
  5. Years of knowledge and experience
    Let our many years of business sale knowledge and experience in the industry serve you well. Here at Core, we operate in a professional manner at all times; maintaining confidentiality, providing valuable feedback and advice, sharing our valuation expertise and wealth of knowledge with you during your business sale or purchase journey.

Hoping to embark on your own buying or selling journey in the new year? Contact Core Business Brokers today, on (02) 9413 2977, or email Roy on [email protected] and we’ll schedule an appointment today.  

hospitality business

5 tips to create a successful hospitality business

Hospitality will always be an industry with a lot of competition. Why? Because it’s an industry that turns a necessity into a luxury. Sure, we could always cook our dinners and never travel anywhere – but that wouldn’t be much fun at all! So hospitality has created a world where you can experience cuisines from foreign cultures, stay in caravan parks to lavish hotel suites and everything in between – and although 2020 has thrown some speedbumps in the mix, hospitality will always exist in some way, shape or form. So, it’s no surprise that it’s a popular choice for savvy businesspeople when creating a new business.

But what are some things to consider when entering the hospitality sector? How can your business become a success and stand out from the crowd? Here are 5 tips on making your hospitality business the best it can be, and a successful business in its own right.

  1. Customer experience

Plan your customer’s journey from start to finish. From booking to leaving and everything within that timeframe. How can you make it easy? How can you make it special? Find ways to make your customer say “wow”. Whether that’s an SMS reminder 24 hours before their booking, or a complimentary house wine while they wait for their table – make the customer feel special and they will always return.

  • Find your niche

In a sea of restaurants or hotels, how will yours be different? Is it a design feature? A price point? Particular inclusions? A live music happy hour each night? A specific dish you do exceptionally well? Find what makes you stand out and then make sure everyone knows about it. Soon, it’ll be what you’re known for – so make sure it’s something you’re happy keeping long term!

  • Digital presence

It’s not enough anymore to have a good brick and mortar business. You need to be online and you need to be really good at it. Website, Facebook, Instagram – you name it, you need it. Instagram is a particularly important social media platform when it comes to hospitality, as most people nowadays look on Instagram to gauge the feel of the business before deciding to book their stay/meal. The old saying “never judge a book by its cover” doesn’t apply anymore. These days, almost everyone judges a business based on their cover photo!

  • Care about people and the environment

The world is shifting into a more sustainable place, with younger generations focusing on how they can reduce their environmental footprint in any way they can. Find ways to do your bit for the environment and let your customers know how their business helps contribute to your efforts. Likewise, if you can give back to those in need, why not use your business as a positive platform to do so!? Positive publicity through good deeds is priceless, although it shouldn’t be the sole reason for doing good. Good karma comes to those who care about others.

  • Be a local leader

Take a step forward in your local community and be present. Sponsor local sporting events, attend local gatherings and become a local business that people know and care about. Being an active part of your neighbourhood and community is a valuable marketing tool and encourages loyalty when it comes to your customers.

Thinking about buying a hospitality business? Contact Core Business Brokers today, on (02) 9413 2977, or email Roy on [email protected] to chat through your options. We have a wealth of hospitality experience under our belt and would love to discuss the businesses we currently have available.