Business Sale and Purchase Lawyers

Selling A Business

Selling a business involves more than finding a buyer and agreeing on a price. From preparing your business for sale to negotiating the contract and completing settlement, it’s important to understand your legal obligations and protect the value you’ve worked hard to build.

The process of selling a business generally involves three main stages:

1. Preparing your business for sale: Organising financial records, reviewing contracts and leases, identifying potential legal issues and preparing information for prospective buyers to conduct due diligence.
2. Negotiating and preparing the contract: Agreeing on the sale price, included assets, payment terms, warranties, restraints of trade and other conditions, then preparing a business sale agreement that reflects the agreed terms.
3. Settlement and handover: Completing the transaction, arranging the transfer of relevant assets, contracts and leases, and addressing employee arrangements and any continuing obligations.

For a more detailed explanation, read our guide: Three Stages to Selling a Business.

At Rise Legal, our business sale lawyers assist with preparing and reviewing sale agreements, seller due diligence, negotiating contractual terms and the legal steps towards settlement. With practical advice and fixed legal fees agreed upfront, we help business owners approach their sale with clarity and confidence.

Buying a Business: What Should You Check Before Signing?

Before purchasing a business, it’s important to understand exactly what you’re buying, what obligations you may be taking on and any potential risks that could affect the business after settlement.

Legal due diligence helps identify issues that may not be obvious during initial negotiations. While your accountant will generally review the financial position of the business, your lawyer can investigate its legal obligations, contracts, assets and potential liabilities.

Business Purchase Due Diligence Checklist

• Financial records: Reviewing financial statements, tax records and financial performance with your accountant.
• Commercial leases: Checking lease terms, renewal options, rent increases, outgoings, make-good obligations and landlord consent requirements.
• Business contracts: Reviewing important customer and supplier agreements, including any restrictions on transferring those contracts.
• Employees: Identifying employment arrangements, applicable awards, employee entitlements and potential transfer obligations.
• Business assets: Confirming ownership of equipment, stock, fixtures and other assets included in the purchase.
• PPSR searches: Identifying registered security interests over business assets and arranging appropriate releases.
• Intellectual property: Checking trademarks, business names, domain names, websites and other intellectual property used by the business.
• Licences and permits: Identifying necessary approvals and checking which licences can be transferred or must be obtained by the buyer.
• Legal disputes and compliance: Investigating disclosed disputes, regulatory issues and potential legal liabilities.

At Rise Legal, we assist buyers with legal due diligence and reviewing business purchase agreements, helping you make informed decisions before committing to a transaction.

Important Legal Considerations When Buying or Selling a Business

GST and the Sale of a Going Concern

In some circumstances, the sale of a business may qualify as a GST-free supply of a going concern. However, specific legal requirements must be satisfied.

These generally include the sale being for consideration, the buyer being registered or required to be registered for GST, the parties agreeing in writing that the sale is of a going concern, and the seller supplying everything necessary for the continued operation of the business while continuing to operate it until the day of supply.

If the requirements aren’t satisfied, GST may apply. Our business lawyers can assist with the relevant contractual provisions while working alongside your accountant or tax adviser on the taxation implications.

Employees and Entitlements

When a business changes ownership, existing employees may be offered employment by the new owner. Depending on the circumstances, the transfer of business provisions under the Fair Work Act 2009 (Cth) may apply.

Employee entitlements, accrued leave, recognition of prior service and responsibility for employment-related liabilities should be considered before settlement. The obligations can differ depending on the transaction structure and the relationship between the parties.

The Business Sale Agreement should clearly address the parties’ agreed responsibilities for employee arrangements, subject to applicable employment laws.

Commercial Leases

If the business operates from leased premises, the lease can be one of the most important aspects of the transaction.

Buyers should understand the remaining lease term, renewal options, rent reviews, personal guarantees and any requirements for landlord consent. Sellers should also consider their continuing obligations and potential liability following a lease assignment.

Addressing lease requirements early can help avoid delays to settlement or unexpected obligations after the business changes hands.

Restraints of Trade

Business Sale Agreements often contain restraint of trade provisions intended to protect the goodwill being purchased.

These provisions may restrict a seller from operating a competing business or soliciting certain customers for an agreed period after settlement.

Restraints must be carefully drafted, as their enforceability depends on the circumstances, applicable law and the reasonableness of the restrictions.

Share Sale vs Asset Sale: What’s the Difference?

When buying or selling a business operated through a company, the transaction may involve purchasing the company’s shares or acquiring particular business assets.

Asset Sale: The buyer purchases specified assets of the business, which may include equipment, stock, intellectual property and goodwill. The parties need to identify which assets, contracts and liabilities are included in the transaction.

Share Sale: The buyer acquires shares in the company that operates the business. The company generally continues to own its existing assets and remains responsible for its liabilities, making appropriate due diligence and contractual protections particularly important.

The appropriate structure depends on the commercial objectives, taxation considerations, existing liabilities and contractual arrangements. Our business lawyers can assist with the legal aspects of the transaction and work alongside your accountant or financial adviser.

You can also learn more about our Business Structuring Services.

Frequently Asked Questions About Buying or Selling a Business

How long does it take to buy or sell a business?

The timeframe depends on the complexity of the transaction, due diligence, finance arrangements, landlord consent and any licences or approvals required. Many smaller business transactions take several weeks to a few months, although some can take longer.

Do I need a lawyer if I’m using a business broker?

Yes, obtaining independent legal advice is recommended. A business broker generally assists with marketing the business and negotiating commercial terms, while your lawyer helps you understand the legal obligations, reviews or prepares the contract and assists with the legal requirements of the transaction.

Can a seller open a competing business after settlement?

This depends on the terms of the Business Sale Agreement and applicable law. A properly drafted restraint of trade provision may restrict certain competitive activities, provided the restrictions are enforceable in the circumstances.

What if I’m buying or selling a franchise?

Franchise transactions can involve additional obligations under the Franchising Code of Conduct, together with requirements in the relevant franchise agreement.

Rise Legal assists franchisors and franchisees with franchise agreement reviews and related commercial legal matters. Learn more about our Franchise Legal Services.

Do you offer fixed legal fees?

Yes. Rise Legal offers fixed-fee legal services, with the scope of work and agreed fees confirmed upfront. This gives you greater certainty about your legal costs when buying or selling a business.

Can Rise Legal assist with interstate business transactions?

Absolutely. We assist business owners across Australia, with offices on the Gold Coast, in Perth and Sydney. Our team can work with you remotely throughout the transaction.

Further reading: Preparing your business for sale: a checklist and Buying a business: what to check.

Speak with Our Business Sale and Purchase Lawyers

Buying or selling a business? Our team can help you understand the legal process, identify potential risks and prepare or review the agreements needed for your transaction.

Call 1300 064 707 or contact Rise Legal to book your free initial discovery call.

Disclaimer: The information provided on this page is general in nature and is intended for informational purposes only. It does not constitute legal advice and should not be relied upon as a substitute for advice tailored to your specific circumstances. We recommend seeking independent legal advice before making any decisions based on this information.

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