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PLT 101 Activity 7 | The College of Law

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1. Who the clients are and what the file is about 1.1 Who the clients are: 1. Jack Hayley Jaye 2. SMJ Products Pty Ltd (SMH) (possible Clarinda Bianca Jay in her capacity as sole director) 1.2 Wh ... at the file is about: Purchase of the business Demolex Pty Limited by share transfer. 1.3 The client’s objectives: To grow their respective businesses by purchasing a pre-existing business and its clients. 3. Important Matters 3.1. Pre-purchase evaluation 3.1.1 Obermeyer & Marjanovic Corporate and Management Advisers report (summary for client). Initial correspondence shows net assets and liabilities of $665,000. The purchase price is $1,200,000. This means goodwill is valued at $535,000. Success of the business is contingent on the client’s ability to retain and grow customers. It might be beneficial to include a non-compete clause in the contract to prevent losing the company’s main source of income to the vendors after sale. Also need to consider consulting other advisers to ensure clients are not acting out of their depth. They are a builder and interior designers purchasing a demolitions company. Do they know how to do this? Will the need expert advice from this industry? 3.1.2 Personal guarantee & Lease Explain what this means to client and that without specific provisions, the guarantor has no protection in case of lease default. It is in their interest to alter the guarantor deed to give them some protection (for example, by requiring the lessor to take reasonable steps to enforce the lease against the lessee before acting against the guarantor). There is no lease in the file. Should not personally guarantee the lease without knowledge of its contents, i.e. term, rent & special conditions. 3.1.3 Share Purchase, Employees & Contracts As company is being acquired by share process need to consider how employees will be treated. Vendors are stepping down as directors but there is an office manager and several casual employees remaining. These employees might have business knowledge required to keep the company operating [Show More]

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