Are you selling your Childcare Business?
Selling a childcare business can be a daunting endeavour as it can give rise to a variety of unique legal process and challenges. This is why it is imperative for vendors to have an understanding of the legal process, which can be broken down into six distinct stages.
Stage 1 – Gather Information
It is highly recommended that you use a lawyer with childcare experience to prepare and negotiate the documents, as childcare transactions can present specific challenges. In preparing the contract of sale, your solicitor will need important information and documents including but not limited to; a copy of the lease or deeds, list of plant and equipment, a copy of the licence, a copy of the DA and schedule of employee entitlements.
Stage 2 – Prepare The Contract
At this stage you may wish to advise your solicitor of any special conditions you may want to incorporate. These can include but are not limited to warranties about the condition of equipment, assistance before or after completion, and restraints of trade. In addition, there should be conditions precedent dealing with the transfer of the service approval.
Stage 3 – Negotiate And Exchange Contracts
Once each party is happy with the terms, the contract will be legally exchanged and the purchaser will pay the deposit. From this point on there is a legally binding agreement to sell and buy, subject to the conditions precedent being satisfied.
Stage 4 – Satisfy Conditions Precedent
If the purchaser is not an approved provider, this must be a condition of the contract. The regulatory authority must be notified in writing of the proposing transfer by the vendor and the receiving approved provider prior to the transfer taking place.
Stage 5 – Completion
Both parties’ solicitors will agree on the time and date for completion and ensure all documents are handed over in time. If you have bank borrowings, the bank will attend settlement and hand over releases of security interests in return for settlement cheques repaying the borrowings.
Stage 6 – After Completion
Finally, both the vendor and the purchaser must notify the regulatory authority of the transfer in writing. The regulatory authority will then amend the service approval and provide a copy of the amended service approval to the receiving approved provider. If a lease has been assigned to the purchaser then the transfer of the lease must be registered with the relevant land titles office.
As the sale of a childcare business requires an understanding of the legal requirements and challenges at every step of the process, engaging a solicitor with childcare experience is vital in ensuring you get the best possible outcome. If you are considering selling your childcare business and want to ensure the best possible outcome, get in touch with us here.
The information in this article is merely a guide and is not a full explanation of the law. Wood Marshall Williams Lawyers or Childcare Concepts cannot take responsibility for any action readers take based on this information. Information in this article refers to laws in New South Wales and Queensland, laws may vary in other states. When making decisions that could affect your legal rights, please contact us for specific professional advice.
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