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Buying a business can be one of the most exciting and empowering steps you’ll take as an entrepreneur. Whether you’re looking for a fresh start, an established brand, or a new challenge, stepping into business ownership by acquiring an existing operation opens doors to immediate income and a proven model. But as with any big move, there are pitfalls and risks – including legal obligations – that you’ll need to navigate carefully.
That’s where the right legal advice can make all the difference. Experienced business lawyers don’t just tick legal boxes; they help ensure your investment is properly protected, reduce the risk of costly surprises, and set you up for long-term success. If you’re searching for a buying a business lawyer or simply want to understand how legal experts support this process, you’re in the right place.
In this guide, we’ll walk through what’s involved in buying a business in Australia, why involving a lawyer early is so important, and how you can approach your business purchase with confidence – backed by expert support at every step.
What Does Buying a Business Actually Involve?
When you buy a business, you’re purchasing more than just physical assets or a brand name. You’re often acquiring existing contracts, relationships, goodwill, intellectual property, and (in some cases) staff. The exact components will vary depending on whether you’re purchasing business assets (an asset sale) or buying the shares of a company (a share sale).
Here’s a quick overview of what you might be buying:
- Physical assets: stock, equipment, furniture, vehicles, and any property owned by the business.
- Intellectual property: trademarks, copyrights, business names, logos, trade secrets, and databases.
- Contracts: supplier agreements, customer contracts, leases, and licences.
- Goodwill: the business reputation, branding, and client lists.
- Employees: you may inherit existing staff and their entitlements.
- Liabilities: debts, outstanding lawsuits, or other ongoing obligations (often a factor in share sales).
It’s critical to fully understand exactly what you’re acquiring – otherwise, you could inherit more risk than you bargained for.
Why Should I Use a Lawyer When Buying a Business?
Engaging a buying business lawyer isn’t just about ticking a box for peace of mind (though it certainly helps!). The right legal expert will:
- Help you complete thorough due diligence so you know what you’re really getting – and what risks or liabilities come with it.
- Draft or review your Business Sale Agreement to ensure your rights are protected.
- Advise on the best structure for your purchase – whether it’s an asset sale or share sale, or buying as an individual versus through a company.
- Negotiate contract terms and manage any special conditions or warranties to reduce your exposure.
- Flag any regulatory, licence, or compliance issues that could impact the business now or in future.
- Assist with intellectual property transfers or registrations (like trade marks) – crucial for protecting your brand investment.
- Guide you through the transfer of leases, employees, and other ongoing relationships.
Buying a business is, at its core, a complex legal transaction. A lawyer makes sure you don’t miss critical details, ensuring your new venture is set up for success from day one.
How Do I Buy a Business in Australia? Step-By-Step Overview
The business buying process will look a little different depending on the industry, location, and exact structure of the purchase. However, almost every transaction will follow these general steps:
1. Find the Right Business and Make Initial Enquiries
Start with a clear vision (and realistic budget) for the type of business you want. Make initial contact with sellers or brokers, request financials, and sign a Non-Disclosure Agreement (NDA) so confidential details can be shared safely.
2. Conduct Due Diligence
Due diligence is the process of thoroughly investigating the business before you commit. It involves:
- Reviewing financial records and verifying turnover, debts, and sustainability.
- Checking compliance with all regulations (licence, permits, tax).
- Reviewing any leases, key contracts, or major clients and suppliers.
- Assessing intellectual property and branding assets.
- Looking for any hidden liabilities (pending litigation, unresolved disputes, warranty obligations).
Your lawyer will lead this process, helping you spot red flags or negotiate solutions before you sign anything. Learn more about due diligence for buyers.
3. Negotiate and Sign the Business Sale Agreement
This contract sets out exactly what you are buying, price and payment terms, the timing for settlement, warranties provided by the seller, and any conditions (like finance or regulatory approval). It’s vital this agreement is tailored to your deal – and thoroughly reviewed or drafted by a business sale lawyer to protect your interests.
4. Comply with Regulatory and Legal Transfer Steps
You’ll need to arrange the transfer of business names, licences, intellectual property (like trademarks), leases, staff entitlements, and any major contracts. This can involve specific steps with the Australian Business Register, ASIC, landlord approval for premises leases, or industry regulators.
5. Settlement and Handover
Settlement day is when payment is made and official transfer of ownership occurs. Your buying business lawyer makes sure all documents and funds are exchanged correctly, releases are obtained, and you receive clear title to all assets you’ve agreed to purchase.
Should I Buy an Asset or the Shares in a Company?
One of the first legal decisions is whether to buy the assets of a business, or purchase the shares in a company that owns it. Each method has different legal and tax implications:
- Asset Sale: You acquire the business’ physical and intangible assets but not its past liabilities or company structure. You get a “clean slate” but may need to negotiate the transfer of leases, employee entitlements, and contracts individually. Learn more about asset sales here.
- Share Sale: You step into the existing company, including all assets, contracts, and liabilities. This can be simpler for contracts and intangibles, but you risk inheriting undisclosed debts or claims. Thorough due diligence and solid indemnities/warranties are critical.
Your lawyer will help you weigh the pros and cons for your situation, including potential asset sale vs. share sale considerations.
What Legal Documents Will I Need to Buy a Business?
Securing the right documents – drafted or reviewed by an experienced lawyer – is critical for a smooth and safe transition. Here are the most important legal documents when buying a business:
- Business Sale Agreement: The core contract outlining the price, assets or shares included, completion date, warranties, restraints, and conditions for the sale. Learn more about Business Sale Agreements.
- Deed of Assignment or Transfer: Used to transfer leases, contracts, or specific assets from the seller to you.
- Non-Disclosure Agreement (NDA): Keeps negotiations and sensitive business details confidential before finalising the deal.
- Disclosure Letter: A letter from the seller detailing any existing liabilities, contracts, or circumstances impacting the business. It puts their representations in writing.
- Employment Contracts & Variation Letters: If you’re taking on existing staff, you may need new or updated contracts and proper handover documentation to meet Fair Work obligations.
- Intellectual Property Assignment Agreements: Transfers rights for domain names, trademarks, copyright, and other intangible assets. Find out more about IP Assignment here.
- Lease Assignment or Licence Agreements: Ensure your right to the premises is lawfully transferred and you understand any landlord consent requirements.
- Restraint of Trade Clauses: To stop the seller from setting up a competing business shortly after leaving.
Depending on your situation, additional documents may also be important – your business lawyer can advise on the best documents for your needs.
What Laws Do I Need to Comply with When Buying a Business?
Buying a business isn’t just a matter of paying the price. You’ll also need to ensure ongoing legal compliance, both during and after the transaction. Here are some key legal requirements to consider:
Business Structure and Registration
Depending on whether you’re buying as a sole trader, partnership, or company, you may need to register or update your Australian Business Number (ABN), GST status, and other registrations with ASIC or state authorities.
Licences and Permits
Certain businesses require specific licences to operate (e.g., liquor licence, food safety permits, childcare approvals). When you acquire a business, you usually need to transfer existing licences or apply for new ones. Your lawyer will identify what’s required in your industry and jurisdiction.
Employment Law
If staff are transferring, you must comply with the National Employment Standards (NES) and Fair Work Act. You may inherit staff entitlements (annual leave, long service leave, redundancy, etc.), so clear documentation and compliance are essential.
Australian Consumer Law (ACL)
The business will be subject to the Australian Consumer Law covering things like consumer guarantees, product liability, warranties, and fair contract terms. This applies regardless of industry and can affect how you handle refunds, marketing, and complaints.
Privacy Law
If acquiring customer data, you must comply with the Privacy Act 1988 and have a clear Privacy Policy in place. This covers how you collect, store, and use personal information – and may require notification of any data breaches.
Intellectual Property Law
Transferring and registering trademarks, business names, or any other IP assets is critical. Your lawyer ensures all rights, registrations, and renewals are in your name.
For more about key legal compliance areas, see our guide to legal requirements for business.
Common Pitfalls in Buying a Business – And How a Lawyer Can Help You Avoid Them
With so much at stake, making mistakes when buying a business can have lasting consequences. Here are some risks you can avoid with expert legal help:
- Overpaying for the business or buying one on the verge of decline due to poor due diligence or lack of financial/legal review.
- Unknowingly inheriting business debts or unresolved litigation through poorly drafted contracts or insufficient investigation of liabilities.
- Missing key asset transfers such as registered trade marks, intellectual property, or important client/supplier contracts.
- Being stuck in an unfavourable lease or unable to transfer the premises lease (often resulting in major operational headaches).
- Failing to secure restraint of trade or non-compete terms, leading to direct competition from the former owner.
- Violating employment (Fair Work) rules in the handover, causing staff disputes or financial penalties.
- Breach of licensing, regulatory, or privacy requirements if the business needs specific approvals to lawfully operate.
Working with a buying business lawyer from the start means these risks can be managed or eliminated, so you don’t run into costly surprises.
Frequently Asked Questions When Buying a Business
Can I Use a Template Business Sale Agreement or Do I Need Custom Legal Advice?
Every business sale is unique – template contracts can miss critical issues like business-specific warranties, local regulations, lease transfers, or employee entitlements. It’s always wise to have your agreement drafted or reviewed by a lawyer who understands your industry and the specifics of your deal. Learn how Sprintlaw can review your Business Sale Agreement.
Who Pays Legal Fees in a Business Purchase?
Each party typically pays their own legal fees, though sometimes this is negotiated in the sale terms. Regardless, engaging your own lawyer is an investment in protecting your future business success.
How Long Does It Take to Buy a Business?
Simple transactions can take as little as a few weeks, but more complex negotiations, regulatory approvals, or lease transfers can stretch this out. Having a lawyer drive the process keeps things on track and reduces the risk of delays.
Can I Buy a Business as a Foreigner or Non-Resident?
Foreign buyers can purchase businesses in Australia, but may face additional regulatory requirements (like Foreign Investment Review Board (FIRB) approval). A business lawyer can clarify the process for your situation.
Key Takeaways
- Buying a business in Australia is a major investment – getting legal help is the best way to minimise risk and maximise your chances of a smooth transition and future growth.
- Business lawyers guide you through due diligence, review and draft critical contracts (including sale agreements and lease assignments), and keep the deal on track legally and practically.
- It’s essential to think through your business structure and ensure compliance with employment, consumer, privacy, and industry-specific laws.
- The right legal documents – tailored by a lawyer – are crucial for protecting your interests and ensuring all assets and relationships transfer properly.
- Expert legal advice at the buying stage saves you time, money, and stress down the road – it’s worth starting early in your business purchase journey.
If you would like a consultation on buying a business in Australia, you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no-obligations chat.
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