How to Buy a Company in Australia

Buying a company can be the fastest way to grow, enter a new market, or add new capability to your business without starting from scratch.

But acquisitions come with moving parts: deal structure, due diligence, contracts, employees, IP, leases, finance and post-completion integration.

The good news? With a clear plan and the right legal documents, you can manage the risks and get a deal done smoothly. In this guide, we’ll walk through the process step-by-step from a small business owner’s perspective.

Asset Purchase Or Share Purchase: Which Deal Structure Suits You?

Early in your journey, you’ll choose between buying the business assets or buying the company’s shares. Each option has different legal and tax consequences, and the right choice depends on your goals and risk appetite.

Buying The Business Assets (Asset Purchase)

• What you get: specific assets like equipment, stock, IP, customer lists, domain names, and potentially the business name. You can also pick up key contracts and employees (with consent/transfer).
• Why buyers like it: more control over what you inherit. You generally don’t assume historical liabilities unless you agree to take them on.
• Watch-outs: some assets and contracts can’t be transferred without third-party consent (e.g. leases, supplier agreements, key customer contracts). You’ll need a clear Business Sale Agreement and a plan for assignments and novations.

Buying The Company Shares (Share Purchase)

• What you get: the company itself, including all assets, employees, contracts and liabilities (known and unknown) continuing in the same entity.
• Why buyers like it: continuity. Less disruption to operations, contracts often stay in place, and staff remain employed by the same entity.
• Watch-outs: you inherit historical liabilities. This is where deep due diligence and robust warranties and indemnities in a Share Sale Agreement matter.

If you’re weighing the pros and cons, this comparison of a Share Sale vs Asset Sale is a great way to frame the decision before you negotiate price and terms.

Step-By-Step: How To Buy A Company

Every deal is unique, but most follow a predictable path. Use this as your roadmap.

1) Set Strategy And Identify Targets

Clarify why you’re buying. Are you acquiring customers, talent, technology, a brand, or geographic reach? Your strategy will shape valuation, risk tolerance and deal structure.

Shortlist targets that align with your plan, then engage discreetly to gauge interest. If conversations progress, you’ll usually sign a mutual NDA and exchange initial information.

2) Explore The Numbers And Indicative Terms

Request high-level financials, key contracts, staff headcount and any material risks. From here, you can frame an indicative offer (often via a non-binding term sheet or heads of agreement) covering price, structure, adjustments, exclusivity and timelines.

The term sheet isn’t the final contract, but it sets expectations and gives you a period of exclusivity to complete due diligence.

3) Conduct Due Diligence

Due diligence is how you validate what you’re buying, uncover risks, and inform the final deal terms. It typically covers:

• Financial: revenue quality, margins, working capital, debt, tax compliance.
• Legal: corporate records, contracts, IP, employment, litigation, privacy, licences.
• Commercial: customer concentration, churn, pipeline, competitive positioning.
• Operational: systems, suppliers, processes, reliance on founders.

For SMEs, a focused legal review is usually the best risk control you can invest in. Many buyers use a structured Legal Due Diligence Package to ensure nothing critical is missed before they commit.

4) Agree Price, Adjustments And Earn-Outs

Most deals include completion adjustments (e.g. for working capital, debt and cash). Some also include an earn-out where part of the price is paid later if performance targets are met.

Be clear on how adjustments are calculated, who prepares the completion accounts, and dispute-resolution mechanics. If the business is seasonal or has lumpy revenues, well-drafted earn-out formulas can protect both sides.

5) Prepare The Transaction Documents

Your core agreement depends on the structure:

• Asset purchase: a Business Sale Agreement plus schedules for assets, employees, IP, and any contracts being assigned or novated.
• Share purchase: a Share Sale Agreement with warranties, indemnities, restrictions and completion deliverables.

You’ll also need a suite of supporting documents, such as assignment or novation deeds for customer and supplier agreements, IP assignments, lease assignments, and transitional services arrangements if the seller is helping post-completion. Where contracts must move into your name, an assignment of contracts strategy will be essential to continuity.

6) Plan Completion And Transition

Create a detailed checklist for completion-day items (think funds flow, title transfers, resignations/appointments, release of security interests, and delivery of key documents). A practical Completion Checklist keeps everyone aligned and avoids last-minute surprises.

Post-completion, focus on integration: communications, systems access, HR onboarding, supplier updates and brand transition. Your plan should be clear before you sign-execution speed matters to maintain momentum with customers and staff.

The Legal Essentials: What Should You Check (And Fix) Before You Buy?

Strong due diligence informs better negotiations and a smoother handover. Here are key legal areas to focus on.

Corporate And Ownership

• Company records: verify directors, shareholders, share classes and constitutions. Confirm there are no undisclosed options or convertible notes.
• Capital structure: if buying shares, confirm issued capital, pre-emptive rights and any shareholder arrangements in place (e.g. vesting, drag/tag rights).
• Share transfers: check the process for executing and recording transfers; if you’re acquiring shares, you may also review ASIC requirements and any board approval mechanics.

Contracts And Revenue

• Customer and supplier agreements: identify termination rights, change-of-control clauses and consent requirements.
• Key dependencies: look for concentration risk (e.g. one or two customers representing most revenue) and any non-compete obligations that could hamper growth.
• Assignability: for asset deals, ensure critical contracts can be assigned or re-signed on completion.

Intellectual Property (IP)

• Ownership: confirm the business actually owns the brand, website, software, designs and content. If contractors created assets, check that IP has been properly assigned.
• Protection: review trade marks, registered designs and any licensing arrangements. Agree how new IP created pre-completion will be handled.

Employment And Contractors

• Employment terms: review roles, salaries, leave balances, incentive plans, restraints and disputes. If you’re hiring staff on completion, ensure you have a compliant Employment Contract ready.
• Transfer of employees: understand who is transferring, recognition of service, and your obligations under the Fair Work framework and any applicable modern awards.
• Contractors: confirm classification and IP ownership arrangements are sound.

Regulatory, Privacy And Consumer Law

• Licences and permits: validate that all licences are current and transferable where required.
• Privacy: if customer data is involved, check compliance with the Privacy Act and ensure the business has an up-to-date Privacy Policy.
• Australian Consumer Law (ACL): review advertising, refund policies, warranties and complaint handling to ensure compliance with the ACL.

Disputes, Compliance And Insurance

• Litigation and claims: identify any active or threatened disputes and their potential impact.
• Regulatory issues: check for recent investigations, breaches or enforceable undertakings.
• Insurance: understand current cover and whether you’ll step into policies or arrange your own from completion.

What Legal Documents Do Buyers Typically Need?

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

• Term Sheet/Heads Of Agreement: sets out the key commercial terms, structure, price, exclusivity and proposed timelines (usually non-binding except for confidentiality and exclusivity).
• Business Sale Agreement or Share Sale Agreement: your main contract containing the price mechanics, completion steps, warranties, indemnities and restraints.
• Disclosure Letter: where the seller qualifies the warranties by disclosing specific issues you’ve agreed to accept.
• Assignments/Novations: to transfer material customer, supplier and service contracts across (for asset deals) or to continue key relationships post-sale.
• IP Assignment Deeds: to capture ownership of trade marks, domains, software and other creative assets not automatically transferred.
• Employment Offer Letters/Contracts: for employees transferring to you, including recognition of service and any revised terms.
• Transitional Services Agreement: if the seller will provide support for a period post-completion (e.g. IT, finance, founder handover).
• Company Minutes And Resolutions: documenting board and shareholder approvals, resignations/appointments and authority to sign.
• PPSR Releases: to remove security interests registered over assets you’re acquiring.

Your lawyer will tailor the list and draft the documents to reflect your deal structure, risks uncovered in due diligence, and the practicalities of the handover.

Paying For The Deal: Funding, Security And Vendor Finance

Funding an acquisition often involves a mix of cash, bank finance and deferred consideration.

• Bank or private debt: lenders may seek security over business assets, personal guarantees and financial covenants. Build lender milestones into your timeline.
• Deferred payments/earn-outs: useful where value depends on future performance or you want to smooth cash flow.
• Vendor finance: the seller funds part of the purchase price and you repay it over time. If you go down this route, make sure the Vendor Finance Agreement clearly covers interest, security, default and early prepayment terms.

Whichever funding mix you choose, align payment milestones with completion conditions, third-party consents and handover steps so you only release funds when the deal is truly ready to complete.

Common Pitfalls (And How To Avoid Them)

Even experienced buyers can stumble on these issues. Here’s how to stay ahead.

• Underestimating consents: identify all contracts with change-of-control or assignment clauses early. Build consent timelines into your critical path and maintain a fallback plan.
• Rushing due diligence: pressure to “get it done” can lead to costly surprises. A disciplined due diligence process pays for itself in better terms or walking away from bad deals.
• Fuzzy IP ownership: ensure IP created by staff and contractors has been assigned to the business, and that trade marks are filed in the right classes.
• Loose restraints: if founders are exiting, reasonable non-compete and non-solicit clauses help protect goodwill. Make sure they’re carefully drafted to be enforceable.
• Integration as an afterthought: plan post-completion communications, systems, HR and customer touchpoints before you sign. Momentum matters.

Buying Shares? Extra Steps To Consider

If you’re purchasing shares in a private company, there are some additional considerations beyond the core share sale agreement.

• Company governance: review the constitution, board composition and any shareholder arrangements. Where multiple owners will remain, consider updating or putting in place a Shareholders Agreement to set decision-making, exits and dispute processes.
• Share transfers and records: ensure share transfer forms, share certificates and the register are updated correctly at completion. This is especially relevant for sale of shares in a private company where administrative accuracy avoids future ownership disputes.
• Ongoing liabilities: factor in tax exposures and warranty insurance where appropriate. Agree clear limits, caps and survival periods for warranties and indemnities.

If you’re buying the shares without a public process, you might also come across off‑market share transfers; make sure the company’s processes allow it and that board approvals are scheduled into your timeline.

Do You Need A Lawyer To Buy A Company?

You can handle early conversations and strategy on your own. However, buyers usually engage a lawyer once a term sheet is in play to manage due diligence, negotiate the contract suite, and coordinate completion.

For many SMEs, the cost of a well-run legal process is small compared to the value it adds-better protection, fewer surprises, and a cleaner post-completion transition. If you prefer a fixed-scope approach, a practical Business Purchase Package or support from a dedicated business sale lawyer can streamline the deal and keep you focused on the commercial outcomes.

Key Takeaways

• Choose your structure early: asset purchases give you more control over what you inherit, while share purchases offer continuity but carry historical liabilities.
• Run disciplined due diligence across legal, financial, commercial and operational areas to validate value and surface risks.
• Lock in clear contracts: your Business Sale Agreement or Share Sale Agreement should include robust warranties, indemnities, price adjustments and completion mechanics.
• Plan consents and handover: map out third‑party approvals, assignments and a detailed completion checklist to avoid delays.
• Protect the basics: confirm IP ownership, ensure compliant employment arrangements, and align privacy and Australian Consumer Law practices from day one.
• Think ahead on funding: coordinate bank finance, deferred consideration or vendor finance with your conditions and timelines.
• Engage legal support early to negotiate terms, manage risk and keep the transaction on track.

If you would like a consultation on buying a company, you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no-obligations chat.