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If you’re in the process of buying a business in 2025, or still considering your options, there are a number of questions you’ll need to ask the seller. It’s not a small decision to make, so it’s important that you gather as much information as possible to make the right choice going forward. After all, this is all part of your legal due diligence.
Perhaps you chose to purchase a business because it’s easier to hit the ground running – after all, many operations are already established. However, it isn’t as simple as it might seem. Consider the following:
- What happens to the existing employees?
- What if their suppliers don’t want to work with me?
- Is this the right market for me to go into in today’s competitive climate?
- What if the business isn’t performing well? What implications will that have once the ownership transfers?
While buying a business is an exciting step to take, it’s crucial not to overlook red flags that could emerge early in the purchasing process. Don’t worry – we’ve compiled a list of 15 essential questions to ask the seller before you finalise anything.
This way, you can ensure that your investment is worth it and that you’re stepping into a future-ready venture!
1. Why Are You Selling The Business?
This might seem like an obvious question, but don’t underestimate how much insight it can provide. Sellers may part with their business for a variety of reasons, some of which might hint at underlying issues. In 2025’s dynamic market, understanding the motivation behind a sale is more critical than ever.
For instance, if the seller is retiring, that might simply be the natural end of a long career rather than a reflection of poor performance. On the other hand, if the business is being sold at a discount, it’s worth probing further. Ask whether the lower price reflects market challenges such as outdated technology, reputation issues, or even inefficient operational systems.
How Long Have You Had The Business For?
It’s also wise to ask how long the seller has owned the business. A long tenure might indicate a well-established company culture and robust internal processes, though in today’s rapidly evolving market, some legacy systems may need a refresh. Established procedures that have worked for years might not always align with current innovations or customer expectations.
Remember to consider whether any long-standing practices-such as internal policies or supplier arrangements-could hinder new growth. For more insights on refining internal operations, check out our Business Structure Guide.
2. Is It A Share Sale Or An Asset Sale?
There are two primary types of sales when disposing of a business, and knowing which applies is vital before moving forward. A share sale involves purchasing the ownership of the company, meaning you’ll inherit both its assets (tangible and intangible) and its liabilities. Conversely, an asset sale means you’ll acquire only the specific assets you negotiate, leaving the seller responsible for any liabilities not included in the sale.
Each option has its advantages and risks. For an in-depth comparison of both methods, we’ve written more about the features of each sale here.
3. What Kind Of Skills Do You Need?
Every industry demands a mix of general management skills and, at times, specialised expertise. When buying an existing business, you benefit from knowing that there’s historical insight into what worked and what didn’t. Ask the seller about the obstacles they encountered and how they overcame them. Their experiences could help you identify any skill gaps you’ll need to address either by learning on the job or by hiring qualified personnel.
For example, if the seller mentions challenges in digital marketing, you might want to upskill or bring on board someone with expertise in online strategy. This proactive approach will ensure you’re well-prepared to manage and grow the business further.
4. How Has The Business Been Valued?
Understanding how the sale price was determined is essential. Ask the seller to explain the valuation process. Were current market trends, outstanding debts, or non-operational assets taken into account? In 2025, factors such as digital asset performance and customer data value might also influence the price.
Clarifying these points early on can save you considerable headaches later as you work to integrate the business into your plans.
5. How Did You Organise Your Finances? Can I Access Them?
This is arguably the most crucial question to ask. The seller might claim the business is thriving, but only by reviewing their financial records can you verify their assertions. Request access to documents such as tax returns, business activity statements, and cash flow statements. Up-to-date and transparent financial records are essential for assessing the business’s true financial health in 2025.
For further details on what financial documentation to expect, you might find our Legal Requirements for Starting a Business guide useful.
6. What Kinds Of Policies Or Procedures Are In Place?
Before taking over, it’s important to understand how the business operates internally. Check whether the organisation has proper policies in place, such as a Data Breach Response Plan – particularly critical for e-commerce companies – or a Work From Home Policy. Comprehensive policies are indicators of a responsible and compliant business.
Be aware that any shortcomings in these areas could expose you to legal risks. For instance, businesses with an annual turnover of more than $3 million need to comply with the Privacy Act 1988. If the current policies are lacking, you may need to invest additional time and resources to bring the business up to current standards. Consider reviewing our Privacy Policy Guide for further details.
7. Have You Ever Run Into Legal Trouble Before?
Although it might feel awkward, it’s important to ask if the seller has ever faced legal challenges. Any ongoing disputes or past litigation can have significant implications, as liabilities and unresolved legal issues might transfer to you. Being upfront about these matters can help adjust the purchase price or even prompt further negotiations.
It’s always better to identify and address any potential legal hurdles now rather than facing costly surprises later.
8. What Marketing Strategies Worked For You?
Effective marketing is crucial for sustained success. Ask the seller to share which strategies resonated with their target audience and yielded positive results. This information not only helps you understand the current customer base but also allows you to gauge whether these tactics will remain effective in 2025’s evolving landscape.
This approach can also highlight opportunities for innovation – for instance, adapting traditional methods to digital channels. For additional ideas on modern marketing methods, consider reviewing our resources on Intellectual Property and online brand development.
9. What Happens To The Business’ Assets?
When we refer to assets, we’re considering both tangible items like equipment, vehicles, and inventory, as well as intangible assets such as intellectual property and licences. In a share sale, these assets transfer along with the business, while in an asset sale you only acquire what you specifically negotiate.
It’s particularly important to sort out issues like transferring ownership of intellectual property. For example, establishing clear terms for registering a trademark is essential to ensure you can legally use the brand. Similarly, if there is a lease involved, carefully review the terms to decide whether you can assume the existing agreements or need to renegotiate them. For guidance on lease transfers, take a look at our insights on the commercial lease process.
Do I Need A Non-Compete Clause?
Sometimes the seller may plan to start a new business in the same industry, effectively becoming your competitor. This scenario is far from ideal because their insider knowledge could undermine your future success. In such cases, it might be prudent to incorporate a Non-Compete Clause in the sale agreement to protect your new investment from direct competition.
This clause essentially prevents the seller from directly competing with the business for a specified period, safeguarding your market share and intellectual property.
10. Who Are Your Competitors?
Before making a purchase, it’s vital to understand the competitive landscape. Ask about the main competitors and the overall market environment. This will help you determine whether you’ll need to invest substantially in marketing or product improvements to establish or maintain a competitive edge.
For further insights into market trends and competitive analysis, our Industry Regulations Guide can provide valuable context.
11. Who Do You Work With?
Understanding the existing supplier and partner relationships is crucial, as you’ll inherit these contracts once the business transfers. Ask the seller for a detailed list of current suppliers and any ongoing agreements. Maintaining these relationships can be key to keeping business operations running smoothly.
Make sure all supplier contracts, such as your Supply Agreement, are updated following the sale. For additional advice on managing supplier relationships, view our Business Partners Guide.
12. What Happens To The Employees?
When acquiring a business, employee transitions require careful management. Typically, the seller will terminate existing employment contracts and then extend a new offer to the staff. There are generally two outcomes:
- Employees reject the offer and receive compensation, such as a redundancy payment or an Employment Termination Payment, or
- Employees accept the new offer and are formally employed by you, which will require drafting new Employment Contracts.
Should the employees choose to stay on, ensure that all their records and entitlements are transferred accurately. For more comprehensive advice on managing employment during a business sale, consider our Employment Law services.
13. What Is Your Exit Strategy?
A savvy seller will have planned their exit strategy to safeguard both their investment and your long-term interests. Ask whether they established a clear strategy to step away gradually while addressing all outstanding liabilities. A well-structured exit strategy demonstrates that the business was managed with an eye toward sustainable succession.
Given the continual shifts in economic conditions in 2025, a robust exit strategy ensures the business remains attractive and financially sound even as market dynamics change.
14. How Many Hours Do You Dedicate To The Business Per Week?
Before diving in, it’s essential to understand the time commitment required. Running any business demands dedication; ask the seller to share how many hours they devoted per week. This insight will help you gauge whether you’re prepared to invest a comparable amount of time or if additional staff may be necessary to operate efficiently.
This information is especially relevant in the context of 2025, where balancing work and emerging technologies may influence the operational workload.
15. Would You Stay A While Before Handing It Over Completely?
Transitioning to new ownership can be overwhelming. It’s perfectly reasonable to ask if the seller would be willing to remain involved for an agreed period to provide guidance and help ensure a smooth handover. This transitional phase can preserve important relationships with customers, partners, and suppliers and safeguard existing goodwill.
A well-negotiated handover period not only helps you settle into your new role but also minimises disruptions during the changeover.
Next Steps
Buying a business is an exhilarating yet complex endeavour. You should always consult with an experienced lawyer to review or draft your Sales Agreement before finalising any purchase decisions. This process ensures that all potential legal and financial risks are adequately addressed.
By asking these key questions, you can uncover red flags and anticipate challenges before they become major issues. This proactive approach is an essential part of safeguarding your investment and securing a successful future. You can read more about preparing for a business acquisition here.
For ongoing support and legal advice tailored to your needs, feel free to reach out to us at team@sprintlaw.com.au or call us on 1800 730 617 for an obligation-free chat.
In today’s fast-paced 2025 market, informed decision-making is more important than ever. By following these comprehensive questions, you’re setting the stage not only to purchase a business but to ensure its long-term growth and sustainability. For additional guidance, explore our detailed guides on Business Structure and Intellectual Property to build a robust legal foundation for your new venture.
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