3 Must-Consider Issues When Buying or Selling a Rental Business

As an aspiring entrepreneur, there are several opportunities that you’ll come across that will make a significant impact on the trajectory of your career and net worth.

Regardless if it’s a crucial learning opportunity (such as a workshop) or a new opening for a partnership, each vital stepping stone will bear an amount of weight on your long-term path. For many Australian up-and-comers and long-standing hustlers alike, however, one crucial opportunity that tends to make the biggest difference is hire or rental businesses.

Although they aren’t the newest net worth-growing opportunities in existence, hire or rental businesses have helped many forward-thinking entrepreneurs build massive fortunes. May it be property rental, car hires, event area rentals, or bicycle rentals, having this operation in one’s portfolio can make a bigger difference than anyone could expect.

Among all the aspects of hire or rental business management that anyone should take note of, the idea of buying or selling this type of company is one that isn’t discussed as much as it should be.

 

What to consider when buying or selling a hire or rental business



During an entrepreneur’s career path, there will come a time where they either choose to buy a rental business to start with or opt to part ways with their hire company for more significant opportunities. Regardless of what side you’re on, it’s vital to note that the process of buying or selling is filled with complexities and intricacies that must be considered.

If you want to ensure that the transaction goes according to plan, here are three common issues that you might face when buying or selling a rental business:

 

Issue #1: Third-party approvals and consents

One common problem that parties make during the exchange of ownership on a rental business is that they leave out the need to attain the consent of the customer and supply contract.

Commonly regarded as a process of “getting consent to a change of control,” the idea of getting third-party approvals should never be overlooked because it can bring up legal implications if you aren’t careful. Before you buy or sell a rental business, it’s essential to have permission to appear as a condition for completion so that you or the buying party can have operational control of the company.

 

Issue #2: Security interests over assets


Another crucial issue that you can never overlook when carrying out a transaction of this nature is the presence of security interests over assets that may impede your rights or a buying party’s rights to ownership. When handling this issue, you’ll need to inspect if any third parties have the security of the assets proposed to be transferred during the sale on the Personal Property Securities (PPS) Register. Seeing that the purchase or sale of a rental or hire company is considered as an asset sale, it’s vital to clear up any security issues so that the object of a transaction can be released without difficulties.

 

Issue #3: Not having restraints


During transactions over rental companies, one consideration that many fail to make is that they don’t put restraints that protect both parties in the exchange. Having restraints that lay out what is prevented, where it applies, and how long it applies is crucial because it does the following:

  • Protects existing customer and supplier relationships within the rental or hire business being sold or bought.
  • Protects the value of the business after the acquisition is made.
  • Protects the goodwill being bought by the buyer (which is seen as a seller’s restraint).

 

Conclusion


As valuable as jumping into the hire and rental industry may be, buying or selling a business is an endeavour that entails considering crucial details that may make or break the transaction. By considering the three issues mentioned above, you’ll be able to ensure that the business you’re buying or selling exchanges hands smoothly without any long-term complications afterwards!

We’re a legal firm in Milton that specialises in servicing the commercial law, brand protection, and corporate law needs of Australian businesses and entities. Get in touch with us today to learn more about how we can best serve your legal needs!