What To Ask When Buying A Business in Australia: Essential Legal Checklist

Buying a business in Australia can be a smart way to step into ownership with momentum. You’re getting established customers, processes and revenue from day one - but you’re also taking on legal responsibilities that aren’t always obvious at first glance.

If you’ve found a business for sale and you’re ready to move, the best thing you can do is slow down just enough to ask the right questions. A clear checklist, careful due diligence, and well-drafted documents will protect you from hidden issues and give you confidence when you negotiate.

In this guide, we’ll walk through the key questions to ask when buying a business in Australia, how to run your legal due diligence, the laws you’ll need to comply with after settlement, and the essential contracts to have in place. Our aim is to help you avoid surprises so you can focus on growing your new business - not untangling a legal mess later.

The Big Question: What Should You Ask Before You Buy?

Before you sign anything, make sure you’re crystal clear on the fundamentals. These questions will shape your price, the deal structure and your risk profile.

1) What exactly am I buying?

• Is it an asset purchase (you buy the business assets) or a share purchase (you buy the company that owns the business, including its liabilities)? If you’re purchasing assets, an Asset Sale Agreement typically sets out the specific assets and exclusions.
• Which assets are included - plant and equipment, inventory, customer lists, phone numbers, email addresses, domain name, website, social media, goodwill?
• Is any real property part of the deal, or is the business premises leased?
• Are key contracts (suppliers, distributors, payment gateways, software subscriptions) transferrable and do counterparties need to consent?

2) What is the business’s financial and legal position?

• Can you review financial statements, BAS/IAS, tax returns and bank statements for at least the last two to three years?
• Are there outstanding debts, loans, or disputes? Confirm whether there are security interests registered over assets on the PPSR (Personal Property Securities Register).
• Are all taxes (GST, PAYG, income tax) up to date? Any ATO payment plans?
• Have wages, superannuation and employee entitlements been paid and accrued correctly?
• Are there rent arrears or upcoming rent reviews under the premises lease?

3) What contracts are in place - and will they bind me?

• Ask for copies of major customer, supplier and service agreements. Check termination rights, assignment clauses and any change-of-control provisions.
• Identify any non-compete, exclusivity or territory restrictions that could limit how you operate post-settlement.
• If staff are transferring, confirm they have written Employment Contracts and whether there are current or threatened employment claims.

4) What licences and permits does the business need?

• List every licence and permit the business relies on (for example, food business approvals, liquor licences, professional registrations, trade licences, council approvals).
• Confirm whether each is current, transferable to you, and whether the regulator’s consent is needed before settlement.
• Check for location-specific permissions like signage or outdoor dining approvals.

5) What’s the plan for key people and staff?

• Are key employees or contractors staying on? On what terms?
• Which Modern Awards or enterprise agreements apply and how will minimum entitlements be managed?
• Have annual leave, personal leave, long service leave and redundancy obligations been properly accrued and disclosed?

6) Which intellectual property am I getting?

• Clarify ownership and transfer of trade marks, domain names, logos, website content, product designs and proprietary systems.
• Check registrations and renewals, and consider locking in your brand with a formal application to register your trade mark.
• Make sure social media handles and mailing lists are included and can be transferred securely.

7) What legal or compliance risks exist now (or on the horizon)?

• Ask about any current or threatened disputes, compliance notices, safety incidents, data breaches or product recalls.
• Consider regulatory changes that may affect profitability (for example, zoning, licensing caps, or industry rules).

8) What does the sale agreement cover - and what does it exclude?

• Confirm the deal terms, price mechanics and exactly what is included/excluded in the Business Sale Agreement.
• Seek tailored warranties and indemnities to protect you against undisclosed liabilities, IP infringement and tax debts.
• Agree the settlement process, employee transfers, apportionment of outgoings and an appropriate restraint of trade.

How To Run Legal Due Diligence (Without Missing Red Flags)

Asking good questions is the start. Proper due diligence is how you verify the answers and uncover anything that didn’t come up in conversation.

Build a document list and verify, don’t assume

• Request full copies of key contracts and licences, not just summaries, and check for assignment or change-of-control requirements.
• Review financial records (P&L, balance sheet, cash flow, bank statements, tax returns, BAS) and reconcile to sales systems where possible.
• Confirm employee details, entitlements and any outstanding claims, plus superannuation and payroll compliance.

Check public records properly

• Use ASIC records to confirm company status, directors and shareholdings if you’re buying shares in a company.
• Search the PPSR for any registered security interests over the business assets so you don’t inherit encumbrances.
• Search IP databases for trade marks and designs, and confirm domain ownership and renewals.

Assess brand and operational risk

• Scan online reviews and complaints for patterns that might signal systemic issues.
• Speak to key suppliers (with the seller’s consent) to understand supply stability and consent requirements for assignment.
• Confirm that any essential software, payment processors or marketplaces permit transfer to a new owner.

If the deal is significant or complex, engaging professionals to help with legal due diligence can save you money and stress by catching issues early and shaping the negotiation strategy.

Choosing a Business Structure (And Getting Set Up)

Before completion, decide how you’ll hold and operate the business. Your structure affects risk, control and tax treatment.

• Sole trader: Simple and low-cost, but you’re personally liable for business debts and claims.
• Company: A separate legal entity with limited liability; often preferred for acquisitions because ownership and risk are clearer and you can adopt a tailored Company Constitution and governance processes.
• Partnership: Two or more people share profits and responsibilities; set expectations in writing and consider a Partnership Agreement.
• Trust: Useful for asset protection and succession planning, but more complex to establish and administer.

Selecting a structure involves legal, financial and tax considerations. This article is general information only and not tax advice - get independent tax advice about the right structure for your goals and circumstances.

If you’ll have co-owners, putting a Shareholders Agreement in place to set decision-making, exits and dispute processes can prevent headaches later. Where premises are involved, start early on the lease assignment process and factor in landlord approval timeframes.

Key Australian Laws You’ll Need To Follow After Settlement

Taking over a business means stepping into ongoing legal obligations from day one. Here are the big-ticket areas to consider.

Australian Consumer Law (ACL)

If you sell goods or services to consumers, you must comply with the ACL. This covers things like consumer guarantees, refunds, pricing, product safety and avoiding misleading or deceptive conduct. Getting your website, advertising and customer terms into shape early will help build trust and reduce disputes.

Employment and workplace rules

Transferring or hiring staff triggers obligations under the Fair Work framework and applicable Modern Awards. Make sure employees receive compliant Employment Contracts, correct pay and entitlements, and that you understand any transfer of business rules that apply at settlement.

Privacy and data protection

The Privacy Act (including the Australian Privacy Principles) generally applies to businesses with over $3 million in annual turnover, but there are exceptions where smaller businesses are also caught (for example, if you trade in personal information or are a health service provider). If you collect personal data through a website or app, it’s good practice to have a clear, accessible Privacy Policy and to handle data securely.

Intellectual property and branding

Protecting your brand and assets is key to long-term value. Confirm the seller can validly transfer any IP they use, then consider filing to register your trade mark for names or logos you’ll keep using. Also review licences for software, fonts, imagery and product designs to ensure ongoing rights.

Leases and premises

If the business operates from leased premises, carefully review the lease terms, rent reviews, outgoings and make-good obligations. Most sales require a formal lease assignment with the landlord’s consent - often documented by a Deed of Assignment of Lease. Build timing for consent into your settlement plan.

Essential Documents For A Smooth Purchase And Handover

The right documents reduce risk, clarify expectations and make the transition smoother. Depending on your deal, you’ll typically need some or all of the following.

• Business Sale Agreement: Sets out what’s included, the price and payment mechanics, warranties and indemnities, restraint of trade, settlement steps and dispute processes. For a comprehensive, tailored contract, use a dedicated Business Sale Agreement.
• Asset Sale Agreement or Share Sale Agreement: If you’re buying assets instead of the company, the Asset Sale Agreement itemises the assets and liabilities that transfer (and those that don’t). If you’re buying shares, a Share Sale Agreement governs the transfer of ownership in the company.
• Assignment and novation documents: Transfers for key contracts (supplier, customer, software) so you can keep operating with minimal disruption.
• Lease assignment: Landlord approvals and a formal Deed of Assignment of Lease if the business premises are part of the operation.
• Employment and contractor agreements: Clear, compliant Employment Contracts (and contractor agreements where applicable), plus updated policies.
• Intellectual Property assignment: Deeds to transfer trade marks, domain names, logos and other IP, with practical steps to hand over accounts and registrant details.
• Restraint and non-solicit clauses: Often included in the sale agreement to stop the seller from competing immediately or poaching staff and customers.
• Privacy and website terms: A fit-for-purpose Privacy Policy and website/app terms to set expectations with customers and users.

Not every business needs every document, but most acquisitions will require several. Tailoring them to your situation is critical - boilerplate terms rarely fit the commercial realities of a specific deal.

Step-By-Step Purchase Timeline

1. Shortlist and sign an NDA: Once you identify a target, request an information pack and sign a confidentiality agreement so the seller can safely share details.
2. Ask targeted questions: Use the question list above to identify gaps, risks and priorities before you invest time in deeper reviews.
3. Run legal and financial due diligence: Review contracts, licences, financials, HR records, PPSR registrations and IP, and verify what you’re being told with evidence.
4. Agree the deal structure: Confirm whether it’s an asset or share purchase and align on inclusions, exclusions and price adjustments.
5. Negotiate the sale agreement: Secure appropriate warranties, indemnities, restraint, training/transition assistance and a clear settlement plan in the Business Sale Agreement.
6. Line up consents and transfers: Prepare assignment and novation documents, obtain landlord and regulator approvals, and plan for staff transfers.
7. Prepare for day one: Set up bank, payroll, insurances, point-of-sale, supplier accounts, and ensure access to systems, domains and social media.
8. Settle and transition: Complete payments, sign transfers, hand over keys and logins, and conduct a stocktake or asset verification if relevant.

Rushing any of these steps can increase your risk. A clear plan and early preparation for consents and assignments will keep your timeline on track.

Key Takeaways

• Buying a business gives you a running start, but you also take on legal obligations - careful questions and verification reduce risk.
• Be clear on what you’re buying, how it’s structured (assets vs shares), what’s included or excluded, and how contracts and licences will transfer.
• Do proper due diligence: use ASIC for company details, and search the PPSR for security interests over business assets before you commit.
• Sort out your structure early and get tax advice specific to your situation, as structure affects risk, control and tax outcomes.
• Post-settlement compliance matters: understand your ACL, employment, privacy, IP and leasing obligations from day one.
• Protect your investment with well-drafted documents such as a Business Sale Agreement, lease assignment, Employment Contracts and IP assignments.

If you’d like a consultation on what to ask when buying a business and how to set up your documents and due diligence, you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no-obligations chat.