Business Acquisition in Australia: Legal Steps to Buy a Business

Buying an existing business can be a smart way to grow quickly, expand into new markets or take your first step into business ownership with an established customer base.

But a business acquisition also comes with legal, financial and operational risks if you don’t do it properly.

In this guide, we’ll walk you through how small business owners in Australia can approach a business acquisition with confidence - from deciding what to buy and choosing a deal structure, to due diligence, the sale contract, employee transfers and a smooth handover.

We’ll keep it practical, focused on the Australian legal landscape, and highlight where tailored legal support can save you time, money and stress.

What Is A Business Acquisition?

In Australia, most small business acquisitions take one of two forms:

• Asset purchase - you buy selected assets of a business (for example, equipment, stock, intellectual property, goodwill, customer lists and perhaps the lease). You don’t take on the company itself or its historic liabilities unless the contract says so.
• Share purchase - you buy shares in the company that runs the business. You step into the shoes of the current owners and acquire the company as-is, including all of its assets, contracts and liabilities (known or unknown).

Each option has pros and cons. An asset purchase can be cleaner and lower risk because you choose which assets and liabilities to take. A share purchase can be simpler operationally (everything stays in the same entity) and may be preferred for licences, contracts or branding continuity.

If you’re weighing up which path fits your goals, this comparison of Share Sale vs Asset Sale is a useful starting point.

Should You Buy A Business Or Start From Scratch?

Buying a business can accelerate growth, but it’s not always the right move. Before you make an offer, consider:

• Fit and strategy - does the target business clearly align with your customers, capabilities and long-term plans?
• Financial performance - are profits sustainable or linked to the current owner’s personal involvement? What does cash flow look like through the year?
• Operational dependencies - does the business rely on key staff, exclusive suppliers, a sole landlord or one major customer?
• Brand and IP - will you own the trade marks, domain names and social media handles you need to keep trading under the brand?
• Legal risks - any disputes, regulatory issues, safety incidents or legacy liabilities lurking in the background?

With the right preparation, buying a business can be a fantastic growth opportunity. A structured process keeps you in control and minimises surprises.

Step-By-Step Guide To Buying A Small Business In Australia

1) Set Your Acquisition Criteria And Budget

Be clear about price range, industry, location, size, earnings profile, team, customer mix and strategic value. Decide upfront whether you’ll prefer an asset or share purchase - or keep an open mind and let due diligence guide the choice.

2) Explore Finance And Deal Structure

Speak with your lender early. In addition to bank finance, some sellers offer part-payment terms. In those cases, using a clear Vendor Finance Agreement can manage repayment risk, interest, security and default processes.

3) Confidentiality And Early Information

Before receiving detailed financials, ask the seller to sign a Non-Disclosure Agreement (NDA). A well-drafted NDA protects both sides and encourages open sharing.

4) Heads Of Agreement (Optional, But Helpful)

A short, mostly non-binding heads of agreement (also called a term sheet) captures key commercial terms: price, what’s being sold, deposit, exclusivity, target settlement date and major conditions. It sets expectations while you complete due diligence and negotiate the long-form contract.

5) Conduct Proper Legal, Financial And Operational Due Diligence

Due diligence is where you confirm that the business you think you’re buying is the business you’ll actually receive at settlement. Legally, you want to verify ownership, contracts, regulatory compliance, employee issues and any liabilities that might follow the business.

Many buyers engage lawyers to run a structured Legal Due Diligence Package alongside accountants reviewing financials and tax.

6) Choose The Right Sale Contract

For an asset purchase, the main document is a Business Sale Agreement covering exactly which assets you’re buying, the price and adjustments, employee transfers, assignment of contracts, lease transfer and post-settlement assistance. For a share purchase, you’ll use a Share Sale Agreement (sometimes called a Share Purchase Agreement) with warranties tied to the company’s history.

7) Secure The Lease (Or Premises Solution)

If the business has a critical premises, the landlord’s consent is essential. Plan for a new lease or an assignment of the existing lease. Where you’re taking over an existing lease, a Deed of Assignment of Lease ensures the lease rights transfer at settlement.

8) Plan The Transfer Of Employees

For ongoing staff, decide whether they’ll be offered employment with you on substantially similar terms. Understand leave and service transfer rules under the Fair Work Act’s transfer of business provisions. Address any key employee incentives or restraints within the sale documentation.

9) Manage Consents And Third-Party Contracts

Supplier, customer, distribution and software contracts often need landlord or counterparty consent to transfer. Identify change-of-control or assignment clauses early. When contracts must move across, the legal mechanism is usually an assignment of contracts or a new agreement with the same terms.

10) Address PPSR, Warranties And Risk Allocation

Confirm the business assets are free of debt and registrations on the Personal Property Securities Register (PPSR). Understanding the PPSR helps you avoid inheriting someone else’s security interests. Your contract should include appropriate warranties and indemnities from the seller to cover undisclosed issues.

11) Prepare For Settlement And Handover

Settlement is the day you pay the price and receive the business. Work through a completion checklist covering keys, passwords, trade mark and domain transfers, bank merchant facilities, stocktake, employee onboarding, supplier notifications and customer communications. A practical Business Purchase Package helps coordinate these moving parts.

12) Post-Completion Support

Where needed, include a short period of vendor assistance to introduce you to key relationships, hand over processes and support a smooth transition. Spell out hours, responsibilities and payment (if any) in the sale contract.

What Laws And Risks Should Buyers Consider?

There’s no substitute for tailored advice, but these are the common legal areas we help buyers navigate.

Business Structure And Registration

Decide whether you’re buying through a company (often chosen for limited liability) or as a sole trader/partnership. If you form a company, you’ll need an ACN and to register with ASIC. You may also need to register a business name and an ABN. Consider GST registration and state-based licences depending on the industry.

Australian Consumer Law (ACL)

If the business sells goods or services to consumers, ensure practices comply with the Australian Consumer Law - accurate advertising, proper pricing and handling of refunds and warranties. You don’t want to inherit non-compliant policies or representations that exposure you to penalties.

Employment Law And Transfer Of Business

When employees move across, you must comply with Fair Work obligations: correct classification, pay rates and entitlements, and safe workplaces. Check award coverage, existing disputes and any underpayment risk. If service and leave entitlements are transferring, ensure price adjustments reflect this.

Commercial Contracts And Key Relationships

Identify any “must-have” contracts (for example, a distribution agreement or SaaS licence). Review term, price, exclusivity, termination and assignment/change-of-control clauses. Confirm those contracts will either transfer or be reissued on acceptable terms by settlement.

Leases And Property

Premises can make or break a deal. Review lease term, options, incentives, rent review and make-good obligations. Confirm planning permissions and any fit-out approvals. Arrange landlord consent and the right transfer mechanism (new lease or assignment).

Intellectual Property (IP)

Make sure you will own all branding and IP needed to operate the business: trade marks, logos, product designs, domain names, social accounts, website content and any key licences. Verify the seller really owns what they’re selling and that registrations will be properly assigned.

Data, Privacy And Systems

Check how customer data has been collected and managed. If the business is subject to the Privacy Act, you’ll need the right consents and notices in place, and control of systems used to store data. Confirm ownership and transferability of software tools and logins.

Regulatory Licences And Industry Approvals

Some industries require specific licences (for example, liquor, healthcare, financial services or labour hire). Validate that licences are current and transferable (or that you can obtain new ones in time for settlement). Build licence approvals into your conditions precedent.

PPSR, Title And Encumbrances

Always check whether equipment, vehicles or other personal property is subject to finance or third-party security. A PPSR search should be done, and the seller should procure releases so you receive clear title at settlement.

Tax, GST And Adjustments

Review tax returns and BAS lodgements. Understand whether the sale qualifies as a “going concern” for GST purposes, how stock and work-in-progress will be valued, and how employee and rent adjustments will work at settlement.

Warranties, Indemnities And Restraints

The sale contract should include appropriate seller warranties (promises about the business), indemnities (cover for certain losses) and reasonable restraints to prevent the seller from immediately competing and soliciting key staff or customers.

What Legal Documents Will I Need?

Every deal is different, but most acquisitions involve some or all of the following documents.

• Business Sale Agreement: the main contract in an asset purchase, setting out the assets, price, adjustments, conditions, risk allocation and handover. See Sprintlaw’s Business Sale Agreement service.
• Share Sale Agreement: the core contract in a share purchase, covering title to shares, company warranties, pre-completion conditions and completion mechanics.
• Disclosure Letter: the seller’s formal disclosures against warranties, helping to manage risk and clarify known issues.
• Deed of Assignment of Lease: transfers the premises lease to you where you’re taking over an existing site. Sprintlaw can assist with a Deed of Assignment of Lease.
• Contract Assignments/Novations: documents to transfer key supplier or customer contracts - guided by each contract’s assignment or change-of-control clause (more on assignment of contracts here).
• IP Assignment Deeds: to transfer trade marks, domain names, social accounts, copyrights and other brand assets.
• Vendor Finance Agreement: if part of the price is paid over time, a dedicated Vendor Finance Agreement sets clear repayment terms and security.
• Employment Contracts: new offers for transferring employees and any new hires; ensure terms align with awards and your updated workplace policies.
• Completion Deliverables: a practical checklist of everything to be handed over on settlement (for example, keys, logins, merchant facilities, security codes and stocktake), often included within a broader Business Purchase Package.

Not every acquisition will need all of these, but most will need a solid suite of documents that reflect your specific industry, risk profile and deal structure.

How A Lawyer Adds Value To Your Purchase

Buying a business is more than filling blanks in a template. A lawyer helps you:

• Spot red flags faster through targeted due diligence.
• Negotiate warranties, indemnities and restraints to protect your downside.
• Secure landlord and counterparty consents on practical timelines.
• Manage PPSR releases so you receive clean title at completion.
• Coordinate all moving parts so settlement is smooth and low-risk.

Key Takeaways

• Decide early whether an asset purchase or a share purchase suits your goals and risk appetite; review Share Sale vs Asset Sale to compare.
• Run structured legal due diligence to confirm assets, contracts, compliance and liabilities, ideally with a Legal Due Diligence Package supporting your financial review.
• Use the right sale contract - a Business Sale Agreement for asset deals or a Share Sale Agreement for shares - with clear warranties, indemnities and restraints.
• Secure premises (via a new lease or a Deed of Assignment of Lease), manage transfer of employees and plan contract assignments well before settlement.
• Check PPSR registrations and obtain releases so you receive assets free of encumbrances; understanding the PPSR is essential.
• Prepare a practical completion checklist and transition plan so handover is smooth and customers experience no disruption, supported by a coordinated Business Purchase Package.

If you’d like a consultation on your business acquisition, you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no-obligations chat.