Questions To Ask When Buying A Business In Australia

Thinking about buying a business in Australia? Acquiring an existing business can be a smart way to step into entrepreneurship with customers, systems and revenue already in place.

At the same time, you’re taking on history you didn’t create. The right questions - backed by proper legal and financial checks - will help you uncover risks, negotiate better terms and set yourself up for a smooth handover.

In this guide, we’ll cover the key questions to ask when buying a business, the practical steps in the purchase process, the documents you’ll likely need, and the main legal and compliance issues to look out for in Australia.

Our goal is to help you buy with confidence - and avoid surprises after settlement.

What Does Buying A Business Involve?

When you buy a business in Australia, the deal is usually structured in one of two ways: an asset sale or a share sale. The structure has big implications for what you’re buying, what risks you take on and how the transaction is documented.

Asset Sale

You purchase selected assets (for example, equipment, stock, goodwill, the business name, domain names, trade marks and customer contracts) and, where agreed, some specific liabilities. This is common for small and medium businesses because you can choose what you take over and avoid legacy debts you don’t want.

Share Sale

You purchase the shares in the company that runs the business. You’re buying the company “as is”, including all assets and all liabilities (known and unknown). This can work well where the corporate structure, licences or key contracts are best left unchanged.

If you’re weighing up which path is right, it’s worth comparing the differences between a Share Sale vs Asset Sale before you start due diligence.

Why this matters in practice: in an asset sale, you’ll focus on transferring assets and assigning contracts; in a share sale, you’ll focus on the company’s liabilities and warranties. Even settlement tasks can differ - for example, ASIC filings are usually relevant on a share sale (because you’re becoming the company’s shareholder), whereas business name and asset transfers are the focus on an asset sale.

It’s also important to separate legal advice from accounting advice. There can be GST, stamp duty and other tax outcomes depending on the structure. It’s a good idea to speak with an accountant about tax - Sprintlaw provides legal support, not tax advice.

Essential Questions To Ask When Buying A Business

Every deal is unique, but most buyers should cover the same core areas. Use these questions as a practical checklist during your initial review and formal due diligence.

1) Financials And Performance

• Financial statements (at least the last three years): profit and loss, balance sheets and cash flow.
• Tax returns and BAS statements to confirm revenue and GST position.
• Bank statements or source records that substantiate key figures.
• Details of debts, loans, director guarantees and any security granted to lenders.
• Working capital needs: seasonal peaks, stock funding and supplier payment terms.

Ask yourself: Is profitability consistent and supported by source documents? Are there one-off items or “owner perks” that inflate earnings?

2) Ownership, Structure And Title

• Who owns the business and assets today (company, partnership or sole trader)?
• Is the business name registered and included in the sale?
• What assets are being sold - and are they owned outright, leased or under finance?
• Are there any charges or security interests registered over the assets?

Follow the chain of title. Make sure the seller can legally transfer what you’re paying for.

3) Contracts And Leases

• Supplier agreements: Are prices competitive and are contracts assignable?
• Customer agreements: Are key clients locked in, and will they agree to transfer?
• Property: For a premises, do you have landlord consent for assignment or a new lease?
• Software and licences: Can subscriptions and tools be transferred?
• Disputes: Are there any notices of breach, claims or threatened litigation?

Confirm which contracts will continue after completion and what consents are needed before settlement. If a key agreement can’t be assigned, you may need a condition precedent or a price adjustment.

4) Licences, Permits And Compliance

• Industry licences and permits (e.g., food, health, alcohol, professional registrations) - current and transferable?
• Evidence of compliance with workplace health and safety obligations.
• Consumer law practices (refunds, warranties, advertising) aligned with the Australian Consumer Law?
• Privacy practices and data handling (if the business collects personal information).

Gaps here can delay your launch or expose you to penalties. Map every licence and permit required to operate from day one of your ownership.

5) Employees And Workplace Matters

• Current staff list, positions, pay rates and award coverage.
• Accrued entitlements (annual leave, long service leave), and who will bear the cost.
• Employment contracts and workplace policies, including any restraints or IP clauses.
• Open HR issues, performance management and any active claims.

Understand whether employment will transfer to you and how entitlements will be handled in the sale price.

6) Customers, Market And Reputation

• Top customers and revenue concentration - is the business reliant on a handful of accounts?
• Recurring revenue, subscriptions and pipeline quality.
• Competitor landscape and pricing pressure.
• Brand sentiment and public reviews.

Look for concentration risk and any looming churn. A small number of key accounts can be a strength or a single point of failure.

7) Assets, IP And Technology

• Inventory accuracy and stock ageing (write-down risk).
• Equipment condition, service records and finance obligations.
• Intellectual property: trade marks, domain names, logos, content and software ownership.
• Data assets and CRM quality - is customer data accurate, current and lawfully collected?

Confirm that the seller actually owns the IP they’re selling and that any third-party content or code is properly licensed.

8) Reason For Sale And Handover

• Why is the seller exiting now (retirement, relocation, next venture)?
• Will the owner provide a handover, training and introductions to key customers and suppliers?
• Is a non-compete required, and for how long and where?

This context helps you assess risk and negotiate practical support to protect goodwill after settlement.

How To Run Due Diligence And The Purchase Process

Once you’ve gathered initial information, it’s time to dive deeper, negotiate terms and document the deal. Here’s a typical path many buyers follow.

Step 1: Protect Confidentiality

Before you receive sensitive documents, sign a Non-Disclosure Agreement. This protects both sides and encourages an open exchange of information.

Step 2: Formal Due Diligence

Use a structured checklist and verify claims against source records. Many buyers engage lawyers and accountants at this stage. If you want a tailored review, Sprintlaw’s Legal Due Diligence Package can assess contracts, licences, IP and key risks.

Step 3: Heads Of Agreement (Optional)

For larger transactions, parties often sign a short “heads of agreement” outlining price, inclusions, conditions and timeline. It sets expectations while you finalise the detailed contract (make sure any “binding” provisions are intended to be binding).

Step 4: Negotiate The Business Sale Agreement

This is the main contract setting out what’s being sold, the purchase price, adjustments, warranties, risk allocation, restraints and settlement mechanics. We strongly recommend getting a Business Sale Agreement tailored to the deal structure (asset vs share) and your risk profile.

Step 5: Satisfy Conditions Precedent

Many deals are conditional on things like landlord consent, finance approval, assignment of key contracts or specific licences. Track these tasks closely - if they’re not met by the due date, you may need an extension or a revised deal.

Step 6: Prepare For Settlement

Agree a settlement checklist early. For an asset sale, this typically includes signed assignments, title transfers, handover of passwords and assets, and any price adjustments (for example, stock, deposits or prepayments). For a share sale, you’ll usually handle share transfers, company registers and (where relevant) ASIC updates at completion.

Step 7: Handover And Transition

Plan communications to staff, customers and suppliers. If you’ve negotiated a training period or vendor support, schedule the first sessions right away and prioritise introductions to key accounts and partners.

What Legal Documents Will You Need?

The exact documents depend on the size and structure of your deal, but most Australian business purchases involve several of the following.

• Non-Disclosure Agreement (NDA): Protects confidential information you receive before and during negotiations. A short, practical Non-Disclosure Agreement is standard at the outset.
• Business Sale Agreement: The core contract for an asset sale or share sale, covering price, inclusions, warranties and settlement steps. A tailored Business Sale Agreement helps manage risk.
• Assignment Deeds: Transfers of customer and supplier contracts, IP, warranties and other rights. For premises, you’ll likely need a Deed of Assignment of Lease and landlord consent.
• Employment Documents: Letters to transferring employees and updated contracts. If you’re standardising terms, an Employment Contract helps set clear expectations.
• IP Transfer Documents: Assignments of trade marks, domains, logos, creative assets and software. Where brand value is a key asset, it’s worth securing and enforcing your rights (including an application to Register Your Trade Mark if appropriate).
• Disclosure And Warranties: Seller warranties and disclosure materials aligned to your due diligence, so you’re not relying on verbal statements.
• Restraint/Non-Compete: If goodwill is important, robust restraints (for a reasonable period and geography) help protect your investment.

For end-to-end support putting these documents together and managing the transaction, Sprintlaw also offers a scoped Business Purchase Package for buyers.

Legal And Compliance Issues To Watch In Australia

Beyond the contract itself, look closely at the laws and obligations that will apply to the business from day one of your ownership.

Licences And Permits

Identify every licence you need to operate the business (for example, local council approvals, food or health licences, and any industry registrations). Confirm they are current, transferable where required, and renewed on time.

Australian Consumer Law (ACL)

If the business sells goods or services, it must comply with the ACL on matters like consumer guarantees, refunds, warranties and advertising. Assess current practices and plan any updates you’ll implement after settlement so they’re consistent and legally sound.

Employment And Workplace Safety

Review award coverage, minimum pay, penalties, roster rules and record-keeping. Make sure you have appropriate contracts, onboarding and policies in place, and that workplace health and safety risks are actively managed.

Privacy And Data Handling

If the business collects personal information (for example, customer details, email lists or membership data), ensure privacy notices are accurate, data is obtained lawfully, and systems are secure. You may also want to refresh consents and preference centres post-settlement to maintain trust.

Intellectual Property

Confirm who owns the brand assets, creative materials and software used in the business, and that you are acquiring the right to use them. Consider registering key brand elements by lodging a trade mark application to strengthen your position after settlement.

Security Interests (PPSR)

Check whether suppliers or lenders have registered security interests over assets on the Personal Property Securities Register (PPSR). Where relevant, ensure releases are obtained at or before settlement so you take assets free of third-party claims.

Taxes, GST And Duties

There can be GST, stamp duty or other taxes depending on the deal structure, asset classes and location. It’s best to get advice from your accountant early and factor these costs and processes into your timeline. Sprintlaw focuses on legal documents and compliance - we don’t provide tax advice.

Franchising (If Applicable)

If the business is part of a franchise network, additional rules apply, including franchisor disclosure and consent, and compliance with the Franchising Code of Conduct. Specialist review of the franchise agreement and disclosure is highly recommended; engaging a Franchise Lawyer can help you understand your ongoing obligations.

Share Sale Specific Risks

In a share sale, you inherit the company’s liabilities, not just its assets. Warranty and indemnity protection, a carefully drafted disclosure process and thorough due diligence are essential to manage legacy risks.

Asset Sale Specific Tasks

In an asset sale, list every asset to be transferred (including intangible assets like domains and social media) and organise assignments or new contracts where needed. Build landlord consent and key customer or supplier consents into your conditions precedent so you’re not locked into completing without them.

Key Takeaways

• Decide early whether you’re pursuing an asset sale or a share sale - the structure affects risk, tax outcomes and the documents you’ll need.
• Ask targeted questions across finances, contracts, licences, employees, IP and market position, and verify answers with source records.
• Run structured due diligence under a proper NDA, and negotiate a Business Sale Agreement that clearly sets out price, inclusions, warranties, restraints and settlement steps.
• Line up critical documents such as assignment deeds, employment documents and IP transfers, and secure landlord and third‑party consents before completion.
• Check compliance with Australian laws that apply from day one - consumer law, employment, privacy, licences and PPSR - and plan any operational changes you’ll implement post‑settlement.
• Get professional help where it counts: legal advice for contracts and compliance, and an accountant’s advice for GST, stamp duty and other tax issues.

If you’d 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.