Fast Movers SA 2009
Issue No. 50 - December/ /
Dont let detail kill deals - Wallmans
Fast Movers don’t always have the time to ensure their legal needs and requirements are keeping pace with their business progress.
With more than 60% growth in the past four years, Wallmans Lawyers is well placed to advise other fast moving SMEs on legal imperatives.
“When growing, there are a number of important issues for a business to deal with,” says Wallmans Partner, Commercial, Trevor Edmond, “but there are five that are crucial: business structures, asset protection, financing, working capital and dealing with debtors and payments.”
Trevor says it’s difficult in the early stages to get business structure correct, but getting it right from the start is essential, as it can be very difficult to change later on. Should it be a trust or partnership, and what legal or other impediments to operation exist?
For example, a franchising business could be set up so IP resides in a trust that grants a license to a company which grants the franchise. While this brings tax benefits resulting from income going to the company, if the business is taken over there are capital gains tax benefits if the real assets, the IP, reside in the trust.
“A business owner may regret not segregating the assets of capital growth from the revenue stream,” Trevor observes.
Should the company ever be sued, the real assets are quarantined in the trust.
“When it comes to asset protection, you have to identify the assets the business has, including its IP, trade marks, patents and designs,” Trevor says. “And it’s not just company assets, but personal assets as well.
“A business owner might be asked to give personal guarantees. Although it’s getting more difficult, there are still ways to quarantine personal assets from risk.”
Business owners could learn from the legal profession: “Very few professionals own anything, not even their home,” Trevor notes, candidly. “You can be unlucky. You can hit the marke...
