What Does ‘Going Concern’ Mean In Business? (2025 Updated)

Contents

‘Going concern’ is a term that relates to the sale of a business. If you’re selling a business as a going concern, then the sale includes all aspects of the business required to keep it operating as it was prior to the sale.

In this article, we’ll look at going concern sales in business as well as the following:

The meaning of going concern
How a sale of business usually works
Paying GST
Business Sale Agreements
Misleading and deceptive conduct
Share sale and asset sale
Employee concerns
Selling a franchise

What Does ‘Going Concern’ Mean?

If you’re purchasing a going concern business, you’re not acquiring just one isolated aspect – you’re obtaining the entire operational framework. The intent behind a going concern sale is that the seller continues to run the business right up until the sale is finalised, ensuring a seamless handover.

After that, the new owner takes control. Everything the business needs to continue operating is included in the sale, such as trade marks, property, employees, contracts and other essential elements – including updated digital assets and operational systems that reflect the innovations of 2025.

How Does A Sale Of Business Work?

When a business owner decides they are ready to sell their business, the process generally begins with valuing the business. This valuation considers the business’s net worth, investments, and market comparisons with similar enterprises. In 2025, modern valuation techniques and data analytics provide even greater accuracy.

Once the value has been established, sellers can start to find potential buyers – many opting to engage a business broker for assistance. It is also worthwhile to consider your business structure at this stage; whether you are operating as a sole trader or through a company can impact the sale. For more insights on this, see our article on Operating as a Sole Trader.

After a buyer is found, the terms are negotiated and a contract is prepared. Tax obligations, including any adjustments for post-valuation changes, are sorted prior to payment and the eventual transfer of ownership.

An accurate valuation combined with strategic negotiations is essential to ensure a smooth transition. Leveraging expert advice and our streamlined Business Sale Agreement services can help you navigate the process seamlessly in 2025.

Does GST Apply?

Generally, a 10% Goods and Services Tax (GST) is payable for the sale of a business – and you can recover this through input tax credits. However, there is an important exception for the sale of going concern businesses, where the 10% GST is exempt.

In order for the sale to be free of its GST obligation, the following requirements need to be met:

It’s expressly stated in writing that the sale is a going concern
There has been a genuine form of payment for the sale – it is not a gift
The purchaser is registered to pay GST
The original owner operates the business up to and including the day of the sale
Everything necessary for the business to function normally is included in the sale

If these conditions are satisfied, the sale is treated as a going concern and is exempt from GST.

Do I Need A Business Sale Agreement?

Yes, it is highly recommended to have a Business Sale Agreement when selling your business. In 2025, ensuring this contract reflects the latest legal requirements and market conditions is essential.

The agreement is a legally binding contract that outlines all the critical aspects of the sale, providing both parties with clear and enforceable terms. This is an excellent way to protect the transaction and ensure that everyone is aligned on the details.

Selling a business is far more complex than selling a regular item; it requires careful legal and financial consideration. For instance, our Contract Review and Redraft service can help ensure that your document complies with current 2025 legislation.

A typical Business Sale Agreement will usually include:

The assets included in the sale
The agreed purchase price
Pre-sale conditions
Post-sale obligations of the seller
Warranties
Completion details
Termination provisions

What Should I Know About Misleading And Deceptive Conduct?

Misleading and deceptive conduct refers to actions, statements, or even omissions made by the seller that lead the purchaser to believe something inaccurate about the business. In 2025, regulatory authorities continue to enforce stringent measures against such practices.

As the name suggests, it involves any statement or omission that is likely to mislead customers into making a purchase they might otherwise not have made. Updated legal frameworks now impose heavier penalties, so maintaining full transparency is more critical than ever. For additional insights, see our guide on What Makes a Contract Legally Binding.

To avoid any risk of misleading or deceptive conduct, be forthright with your buyer and answer all their queries honestly. Ensure that all pertinent information is disclosed before entering into a Business Sale Agreement.

Example
Jamie is selling their business to Tara as part of a going concern sale. To make the business appear more attractive, Jamie fabricates glowing online reviews about the business’s performance. This conduct is considered misleading and deceptive; Jamie could face severe legal consequences.

How Do I Sell A Business?

When selling a business, it’s important to decide on the type of sale you wish to conduct. There are primarily two ways to sell a business – a share sale and an asset sale.

A share sale involves selling the company’s shares, whereby the buyer acquires ownership of the company as a legal entity. Conversely, an asset sale entails transferring ownership of the company’s assets, including intellectual property, client lists, trade secrets, business plans, land, and stock.

There are advantages and disadvantages to both asset and share sales. Your choice will ultimately depend on your objectives and the specific circumstances of your business. In today’s dynamic 2025 market, engaging experts early on is critical. For further guidance, explore our Business Sale Agreement services and consider a consultation to evaluate your options.

What Happens To My Employees When I Sell My Business?

It’s advisable to keep your employees informed about any developments regarding the sale. Open communication allows them to prepare for new ownership arrangements, or in some cases, seek alternative employment if necessary.

A going concern sale typically includes the employees working for the business, so alerting them about a forthcoming change in ownership is highly recommended. In 2025, with further clarifications in employment law, it is important to also review and update any relevant employment contracts – you can check our resource on Employment Contracts for current best practices.

Selling A Franchise

Selling a franchise involves transferring a branch or outlet of a business that operates under a franchisor’s brand, rather than selling an independent business.

The process for selling a franchise differs from that of a standalone business because it must comply with the terms laid out in the Franchise Agreement. This agreement often dictates whether the franchisor has the right of first refusal and sets out specific protocols for the sale.

Selling a franchise also involves multiple considerations such as informing the franchisor of your intention, consulting the Franchise Agreement, and ensuring all legal and operational conditions are met. It is important to review the Franchising Code of Conduct – which now, as updated for 2025, requires that a prospective franchise buyer is given at least 14 days to review all related documents before signing.

With the franchising landscape evolving in 2025, both franchisees and franchisors must be particularly diligent. Updated regulations provide enhanced protections for all parties involved, so it’s wise to seek legal advice to review your Franchise Agreement and confirm compliance with the latest Australian Franchise Law standards. For tailored advice, get in touch with our Franchise Lawyers.

Key Takeaways

A going concern sale is an effective way to ensure your business continues to operate after you step away from ownership. When executed correctly, it can benefit all parties involved – but seeking the guidance of legal professionals is crucial.

To summarise what we’ve covered:

A going concern sale means selling everything the business needs to operate.
In a going concern sale, the seller runs the business until the sale is finalised, after which the buyer takes over.
GST is exempt from going concern sales provided that all relevant criteria are met.
Honesty and transparency are essential to avoid misleading or deceptive conduct.
Having a robust Business Sale Agreement in place is highly recommended.
Decide whether an asset sale or share sale best meets your objectives.
Keep your employees informed throughout the sale process.
For franchise sales, the process and obligations are determined by the Franchise Agreement and relevant codes.

If you would like a consultation on selling your business, you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no-obligations chat. Our team is here to help you navigate the evolving legal landscape of 2025 and ensure your sale is structured for success.

Sapna Goundan

Sapna has completed a Bachelor of Arts/Laws. Since graduating, she's worked primarily in the field of legal research and writing, and she now writes for Sprintlaw.

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