Section 52 Statement | Sprintlaw Australia

When you’re selling a small business, it’s natural to focus on the big-ticket items: agreeing on price, finding a buyer you trust, and getting the deal to settlement.

But in practice, many business sale disputes don’t start with the headline numbers - they start with what was said (or left unsaid) during negotiations. That’s where a “Section 52 statement” comes in.

If you’ve been asked to provide a section 52 statement as the vendor of a small business (or you’ve seen it listed in the sale process), it’s worth slowing down and getting clear on what it is, why buyers request it, and how to prepare one without exposing yourself to unnecessary legal risk.

Below we break down how Section 52 statements work in Australia, what they usually include, common vendor pitfalls, and practical steps you can take to protect yourself while still keeping the sale moving.

What Is A Section 52 Statement (And Why Do People Still Call It That)?

A “Section 52 statement” is a written statement a vendor provides to a buyer when selling a business. It usually sets out key information the buyer is relying on - commonly things like revenue figures, expenses, staff details, key contracts, and anything else that could affect the value of the business.

The term “Section 52” is a legacy reference. Historically, section 52 of the Trade Practices Act 1974 (Cth) dealt with misleading or deceptive conduct. That law has since been replaced, and the modern equivalent is generally section 18 of the Australian Consumer Law (ACL).

Even though the legislation has changed, many people (including accountants, brokers, and business owners) still use the phrase “Section 52 statement” as shorthand for:

a vendor disclosure document given to a purchaser; and
a record of what the buyer says they are relying on when deciding to buy.

From a practical perspective, a Section 52 statement is often used to reduce “he said / she said” arguments later. If there’s a dispute, everyone can point to a single document and assess what was represented.

That said, a Section 52 statement can also increase your risk if it contains inaccurate information, overly confident forecasts, or inconsistent figures compared to your financial records.

Do Vendors Have To Provide A Section 52 Statement When Selling A Small Business?

There isn’t one universal rule in Australia that says every sale must include a Section 52 statement.

Whether you “need” one usually depends on:

How the sale is structured (asset sale vs shares, franchise vs independent business, etc);
State and territory practices (some advisers or industries treat it as standard);
What the buyer requests during negotiations; and
What the sale contract requires.

In many small business sales, a buyer’s lawyer will push for a Section 52 statement because it helps them:

pin down what information the buyer relied on;
confirm the seller’s key disclosures in writing; and
support due diligence and finance approval.

As a vendor, you should treat the Section 52 statement as part of the overall transaction documents, alongside the business sale agreement and any special conditions.

And importantly: even if you don’t provide a formal Section 52 statement, you can still be legally exposed for misleading statements made in emails, brochures, calls, pitch decks, or casual conversations.

Is A Section 52 Statement The Same As “Due Diligence”?

Not quite. Due diligence is the buyer’s process of checking the business - financials, contracts, risks, legal compliance - before they commit.

A Section 52 statement is usually a vendor-provided disclosure document that can feed into the buyer’s due diligence (and can become part of the contract framework).

Many buyers will run a more detailed review alongside a lawyer-led legal due diligence process.

What Should A Section 52 Statement Include For A Small Business Sale?

There’s no single template that suits every deal, but Section 52 statements for small business sales usually cover the “value drivers” a buyer is paying for and the risks they need to understand.

Because this document can become central to disputes, your goal should be to make it accurate, complete, and consistent with your supporting documents.

Common Sections In A Section 52 Statement

Business overview: business name, ABN/ACN (if applicable), what the business does, trading history, and business model.
Financial information: turnover, costs, gross profit, net profit, and what period the figures relate to (with references to accounting reports, BAS, POS reports, and bank statements). Where possible, use figures prepared or confirmed by your accountant and keep the sources clear.
Add-backs and adjustments: if you’re presenting “normalised earnings” (e.g. adding back one-off expenses), be very clear about what’s included and why.
Assets included in the sale: plant and equipment lists, stock, vehicles, IP, websites/social accounts (if included), and any exclusions.
Premises: lease details (rent, term, options, outgoings) and whether landlord consent is required.
Employees and contractors: number of staff, roles, whether they are full-time/part-time/casual, and key entitlements (and who pays what on completion).
Key suppliers and customers: major accounts, any concentration risk (e.g. “40% of revenue comes from 1 client”), and any material contracts.
Licences and compliance: industry licences, council approvals, and whether there are any known compliance issues.
Disputes and liabilities: any current disputes, complaints, threatened claims, warranty issues, refunds, chargebacks, or regulatory notices.
Security interests / finance: whether assets are subject to finance or other security interests and how they’ll be released at settlement (this is often overlooked).

Be Careful With Forward-Looking Statements

Buyers often want projections, expected growth, and “what the business could do.” But forecasts can become risky if they’re presented as if they’re guaranteed.

If you include forward-looking information, consider:

labelling it clearly as an estimate or projection;
stating the assumptions (e.g. staffing levels, marketing spend, seasonality); and
ensuring it’s supported by real historical performance, where possible.

A disclaimer can help frame projections, but it won’t “save” you if the overall impression is misleading.

Key Legal Risks For Vendors: Misleading Conduct, Misrepresentation, And “Half-Truths”

From a vendor’s perspective, the biggest legal risk with a Section 52 statement is that it becomes evidence of what you represented to the buyer.

In Australia, businesses must not engage in misleading or deceptive conduct. That principle can apply in business sale negotiations - including where statements are made about revenue, profit, customer numbers, or the condition of the assets being sold.

A separate (but related) risk is misrepresentation, where one party is induced into a contract because of false statements.

What Common Vendor Mistakes Cause Problems?

“Best month ever” figures presented as typical: cherry-picking a strong trading period without disclosing seasonality or one-off spikes.
Mixing cash and accrual figures: quoting revenue based on invoices issued, when cash actually received is significantly lower (or vice versa).
Not explaining owner involvement: the business looks profitable because the owner works 60 hours/week but wages are understated.
Overstating customer retention: claiming “all customers are repeat customers” when sales data doesn’t support that.
Leaving out material issues: unresolved disputes, a key supplier about to leave, a looming lease issue, or a major client signalling they won’t stay after the sale.

Can A Disclaimer Fix Everything?

In many Section 52 statements, you’ll see wording like “the buyer must rely on their own enquiries” or “no warranty is given.” Disclaimers can be useful, but they are not a magic shield.

If you provide information that is inaccurate or presented in a way that creates a misleading impression, a disclaimer may not prevent liability.

The safest approach is to focus on:

accuracy;
clear time periods and sources;
full context (especially where a statement could otherwise be misleading); and
updating the buyer if something materially changes before completion.

Don’t Forget Verbal Statements And Marketing Material

A Section 52 statement is important, but it’s only one part of the story.

If you (or your broker) have made representations elsewhere - for example, in an information memorandum, marketing listing, email chain, or phone call - those statements can still matter.

As a vendor, it’s a good idea to keep your messaging consistent and “document-backed” across the entire sale process.

How To Prepare A Section 52 Statement As A Vendor (Practical Steps)

If you’re being asked for a Section 52 statement as the vendor of a small business, it’s worth treating it like a project with inputs from your accountant and your lawyer.

Here’s a practical way to approach it.

1. Start With Your Source Documents (Not Your Memory)

Before you draft anything, gather the records that support your statements:

profit and loss statements (ideally for multiple years);
BAS and GST reports;
bank statements (as a cross-check);
POS reports and sales summaries;
lease and any variations;
employee summaries and entitlements;
supplier agreements and key customer contracts; and
asset registers / equipment lists.

This is how you avoid accidental inaccuracies that come from “ballpark” figures. And because financial reporting can vary (for example, cash vs accrual accounting, and how add-backs are treated), it’s often worth having your accountant help you present the figures clearly and consistently.

2. Be Clear On What You’re Selling (Assets, Stock, IP, Goodwill)

Many misunderstandings happen because the parties haven’t nailed down what’s actually included in the purchase.

Make sure the Section 52 statement lines up with the sale structure and the contract, including:

what assets are included;
what is excluded;
how stock is valued and adjusted; and
what happens to things like websites, domain names, and social media accounts.

For online and digitally-driven businesses, these details are often central to goodwill and customer acquisition.

3. Check For Security Interests (And Plan For Release)

If equipment, vehicles, or other assets are under finance, there may be a security interest registered against them.

Before you promise “clear title” to the buyer, it can be sensible to check your position using the PPSR and your finance documents.

If something needs to be paid out or released at settlement, that should be planned early so it doesn’t delay completion.

4. Decide How You’ll Handle Projections (If At All)

If you include projections, keep them conservative and supported.

It’s often safer to present:

historical trends (e.g. last 12 months, last 24 months); and
explanations of known drivers (seasonality, pricing changes, opening hours).

If a buyer wants upside, it’s better that they reach that conclusion from the numbers, rather than you “selling the dream” in writing.

5. Align The Section 52 Statement With Your Contract

The Section 52 statement should not contradict the sale contract.

In many deals, the statement is:

attached to the contract as an annexure; or
treated as a pre-contractual representation the buyer says they relied on.

Either way, it should be reviewed together with the completion checklist so you don’t miss items that need to be delivered at settlement (like keys, logins, supplier handovers, and releases).

6. Update It If Something Material Changes

Sales can take weeks or months. If trading conditions materially change before settlement (for example, you lose a major client or the lease position changes), you should get legal advice about what needs to be disclosed and when.

Trying to “push through” to completion without addressing a material change is the kind of thing that can trigger a dispute later - especially if the buyer only finds out after they take over.

What Else Should Vendors Do To Protect Themselves In A Small Business Sale?

A Section 52 statement is only one piece of a safe sale process. If you want to reduce the chance of post-settlement disputes, it helps to think about the entire lifecycle of the transaction.

Use A Written Process For Buyer Enquiries

Where possible, keep key responses in writing, and make sure your broker (if you have one) is aligned on what can and can’t be said.

If you’re asked something you’re not sure about, it’s okay to say you’ll confirm after checking records.

Make Sure The Contract Matches The Commercial Deal

The contract should clearly cover:

what is being sold and for how much;
deposit terms and timing;
restraint of trade (where appropriate);
employee and leave entitlement adjustments;
lease assignment and landlord consent;
training and handover period; and
warranties and limitations of liability.

Once contracts are exchanged, your ability to “change your mind” may be limited, so it’s important you’re comfortable with the terms before signing. If this is on your mind, it may help to consider situations where a seller can pull out of a contract and when they generally can’t.

Remember: Silence Can Sometimes Mislead

Sometimes vendors assume that if a buyer didn’t ask a question, the vendor doesn’t need to say anything.

There isn’t a general “duty to disclose everything” in every business sale. However, depending on the circumstances, staying silent can still create legal risk - particularly where you’ve said something that becomes misleading without further context, or where you fail to correct something you know is wrong.

This is one of the main reasons vendors often choose to have their disclosure documents prepared or reviewed with a lawyer - it’s not about “over-lawyering” the deal, it’s about preventing avoidable disputes.

Key Takeaways

A Section 52 statement is a vendor disclosure document used in many small business sales to record what information the buyer is relying on.
Even though it’s commonly called a “Section 52” statement, the modern legal risk area is generally misleading or deceptive conduct under the Australian Consumer Law.
The biggest vendor risk is providing inaccurate figures, omitting key context, or making confident projections that aren’t supported by evidence.
A good Section 52 statement is clear, specific, and consistent with your financial records, contracts, and what’s actually being sold.
Disclaimers can help, but they won’t fix a statement that is misleading overall - accuracy and context matter most.
The safest approach is to prepare the statement using source documents and have it reviewed alongside the business sale contract and settlement requirements.

Note: This article is general information only and isn’t legal, tax or accounting advice. For help confirming financial figures (including BAS/GST and how they should be presented), you should speak with a qualified accountant.

If you’d like help preparing or reviewing a Section 52 statement for your small business sale, you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no-obligations chat.

Section 52 Statement: What Small Business Sellers Must Disclose