Essential Questions To Ask When Buying A Business In Australia

Buying a business in Australia can be a smart way to step into entrepreneurship with momentum. You get established customers, processes, and brand recognition from day one.

But a business purchase is still a major investment. The contracts you sign, the way the deal is structured, and the information you verify before settlement will determine how smooth the handover is - and whether you inherit hidden risks.

In this guide, we’ll walk through the essential questions to ask when buying a business in Australia, what to check during due diligence, the legal documents you’ll likely need, and common pitfalls to avoid. Our goal is to help you feel confident, prepared, and protected as you move forward.

Why Do The Right Questions Matter?

Every business sale is different. Even a solid, long-running venture can carry liabilities you don’t see at first glance - unpaid taxes, encumbered assets, non-transferable contracts, or a lease that needs the landlord’s approval before assignment.

Asking the right questions helps you:

• Uncover legal and financial risks early.
• Validate the price and understand what you’re really buying.
• Confirm compliance obligations, licences and permits.
• Negotiate stronger protections and conditions in the contract.
• Plan a smooth transition that keeps staff, suppliers and customers on side.

If you’re feeling unsure about what to ask, you’re not alone. A structured checklist and targeted legal help make a big difference - especially before you sign any heads of agreement or transfer documents.

The Must‑Ask Questions During Due Diligence

1) Why Is The Business For Sale?

Ask directly about the seller’s reasons: retirement, relocation, health, or performance. Honest context can reveal customer concentration risks, industry headwinds, or cost pressures you’ll want to plan for.

2) What’s The Financial Health?

• Request 3–5 years of financial statements (P&L, balance sheet, cash flow) and compare them to ATO tax returns and BAS statements.
• Confirm any outstanding debts, ATO liabilities, superannuation, or contingent liabilities.
• Stress‑test revenue sources and margins for key products or services.

Tip: financial and tax questions are critical, but they’re specialist areas - speak with your accountant about GST, income tax, payroll tax and any potential stamp duty on assets. Sprintlaw provides legal support, not tax advice.

3) What Exactly Am I Buying - Shares Or Assets?

Deal structure drives risk. In a share sale, you acquire the company (including its liabilities). In an asset sale, you choose specific assets and goodwill and typically leave historic liabilities behind. The right choice depends on tax, contracts, and risk allocation. It’s worth understanding share sale vs asset sale early, as this will shape the contract, price, and the approvals you’ll need.

4) Who Owns The Assets, IP And Key Contracts?

• List all assets included in the price: equipment, inventory, customer lists, software, vehicles, phone numbers, domain names, social media, and any licences.
• Confirm ownership (or lease/finance arrangements) and whether assets are free from security interests.
• Identify essential contracts (supplier agreements, distribution arrangements, service contracts) and whether they can be assigned to you.

Search the PPSR to check for security interests over assets - understanding what the PPSR is will help you catch hidden encumbrances. For brand protection post‑completion, consider whether you’ll need to register your trade mark and put IP assignment wording into the sale contract.

5) What Licences And Compliance Obligations Apply?

• Industry licences or permits (for example, food, alcohol, health, NDIS, or council approvals).
• General compliance, including the Australian Consumer Law (ACL), privacy and data handling, and workplace health and safety.
• Ongoing reporting or accreditation obligations that survive the sale.

Ask to see current registrations, approvals, and renewals. Confirm they’re valid, up‑to‑date, and transferable (some authorities require you to apply afresh).

6) What’s The Lease Situation?

• Is there a current lease or licence to occupy, and when does it expire?
• Does the lease allow assignment, and will you need written landlord consent before settlement?
• Will the landlord require guarantees, a new bond, or a fresh lease?

Lease issues can delay or derail a sale. Factor in time for landlord approvals and ensure the contract makes completion conditional on receiving consent to a lease assignment.

7) Who Are The Key Employees - And What Happens To Them?

• Identify critical roles, employment status (full‑time/part‑time/casual), and award coverage.
• Map accrued entitlements and whether they’re being adjusted in the price at settlement.
• Check for disputes, claims, or sensitive HR issues.

Under Fair Work’s “transfer of business” rules, certain employee entitlements and industrial instruments can follow staff to the new employer. Plan early for offers of employment, onboarding and updated Employment Contracts so there’s continuity on day one.

8) What’s The Customer Base And Pipeline?

• Measure customer concentration (do a few big clients drive most revenue?).
• Review customer contracts, term lengths, renewal dates and assignment restrictions.
• Discuss a handover plan, introductions to key accounts, and non‑compete/non‑solicit protections.

Customer churn right after a sale is a common risk. Strong transition support and clear vendor restraints help protect goodwill.

9) Are There Any Legal Disputes Or Notices?

• Ask for written disclosure of current, pending or threatened disputes (customers, suppliers, employees, regulators, or landlords).
• Request copies of infringement notices, breach notices or compliance warnings.

Make sure warranties and indemnities in the contract address undisclosed issues and allocate risk appropriately.

10) How Will The Handover Work?

• Agree on training, shadowing and support (and whether it’s included in the price).
• Clarify transfer of passwords, manuals, SOPs, marketing assets and vendor lists.
• Set a communications plan for staff, customers and suppliers.

How To Run A Solid Due Diligence Process

Due diligence is your opportunity to verify everything before you’re bound to buy. Build a checklist and set a clear information timetable with the seller.

• Documents: Financials (statements, tax returns, BAS), contracts, leases, licences, IP records, employment records and policies.
• Searches: ASIC and director checks, PPSR searches, ABN status, and any litigation searches where appropriate.
• Site Visit: Walk the premises and inspect equipment, storage, signage, maintenance and compliance notices.
• Third Parties: With permission, speak to key employees and suppliers to understand dependencies and culture.
• Pricing: Consider an independent valuation to test assumptions about goodwill and earnings.

If you’re short on time or not sure what to prioritise, a targeted review can save headaches - many buyers engage a lawyer to run a legal due diligence stream alongside their accountant’s financial review.

Important: tax, GST and stamp duty questions can materially affect the deal structure and price. For example, GST treatment may depend on whether the sale qualifies as a “going concern” and stamp duty may apply to certain assets (such as land interests, some leases or other dutiable property). Speak with your accountant or tax adviser early. Sprintlaw does not provide tax advice.

Key Legal Documents You’ll Likely Need

Your contracts should reflect exactly what you’re buying, the price, protections, and what must happen before completion. Common documents include:

• Business Sale Agreement: sets out the assets (or shares) being sold, price and adjustments, conditions precedent, completion steps, warranties, indemnities, restraints and the transition plan.
• Assignment Documents: transfer instruments for contracts, IP, equipment and the premises. For tenancies, a consent and Deed of Assignment of Lease are typically required.
• Non‑Disclosure Agreement (NDA): protects confidential financials and trade secrets shared during negotiations.
• IP Assignment and brand transfers: covers trade marks, domain names, social handles, content libraries and software rights.
• Employment Contracts and policies: onboarding documents for transferring staff and any new hires.
• Shareholders Agreement: if you’re buying in with co‑owners, set the rules for decision‑making, share transfers and exits.
• Vendor Finance Agreement: if the seller is providing part of the purchase price on terms, document the repayment schedule and security.

Not every deal needs every document, but most need several. The key is to document protections clearly and make completion conditional on the approvals you can’t control.

Common Pitfalls (And How To Avoid Them)

Landlord Consent Falls Through

Leases rarely transfer automatically. Make the contract conditional on landlord consent, include a realistic timeframe, and prepare promptly for the landlord’s information requests.

Unseen Security Interests Over Assets

Even if the seller says assets are unencumbered, run PPSR searches. If securities exist, require releases at or before completion (and keep evidence on file).

Transfer Of Business Issues

Under the Fair Work Act, certain entitlements and instruments can carry across when there’s a transfer of business. Map employee service, confirm which entitlements are recognised, and budget for adjustments in your completion accounts. Issue new offers and ensure award compliance from day one.

Tax Surprises After Settlement

GST, income tax and duty settings depend on structure and asset mix. Clarify “going concern” requirements, price adjustments for stock and WIP, and any dutiable assets. Work with your accountant; your legal documents should mirror the agreed tax treatment, but legal advice is not a substitute for tax advice.

Vendor Restraints Are Too Weak

A seller starting a near‑identical venture nearby can erode goodwill fast. Include reasonable non‑compete and non‑solicit restraints that match the geography, timeframe and industry of the business you’re buying.

Key Contracts Aren’t Transferable

Some customer or supplier contracts need consent to assign - or don’t allow assignment at all. Identify these early and make them completion conditions so you’re not left without critical agreements after settlement.

Under‑Documented Handover

Assume nothing will happen “informally.” Your Business Sale Agreement should spell out training, access to systems, admin rights, passwords, marketing assets and introductions to top clients and suppliers.

Key Takeaways

• Start with the big questions: why the business is for sale, what you’re buying (shares vs assets), who owns the IP and key contracts, and how the lease and licences will transfer.
• Run structured due diligence across financial, legal and operational areas - including ASIC and PPSR checks, site inspections and contract reviews.
• Make completion conditional on critical third‑party approvals like landlord consent, licence transfers and assignment of essential contracts.
• Plan for Fair Work “transfer of business” rules and have clear, compliant employment offers and policies ready for day one.
• Lock in protections in a detailed Business Sale Agreement, with proper assignment documents, IP transfers and reasonable vendor restraints.
• Speak with your accountant about GST, income tax and any stamp duty on assets - Sprintlaw provides legal support but not tax advice.

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.