Law Plus Selling a business you've built is one of the biggest financial transactions of your life — and one of the easiest to get wrong. Deals fall over, prices get chipped down and sellers end up liable for problems they thought they'd left behind, usually because a legal step was skipped early. This checklist walks through the main legal work involved, roughly in the order it happens.
1. Decide on the structure: asset sale or share sale
There are two ways to sell a business, and the choice shapes everything that follows. In an asset sale, the buyer purchases the business's assets — goodwill, equipment, stock, the business name, key contracts — from the selling entity, and you keep the company or structure itself (along with its history and liabilities, unless the contract says otherwise). In a share sale, the buyer purchases the shares in the company itself, taking the whole entity, warts and all: its assets, its contracts and its liabilities, including ones nobody knows about yet.
Buyers often prefer asset sales because they can pick what they take on; sellers sometimes prefer share sales for tax and simplicity reasons. Which structure suits your situation is one of the first conversations to have with your lawyer and accountant.
2. Get your house in order for due diligence
Any sensible buyer will conduct due diligence — a legal and financial review of the business before committing. Expect requests for financial statements, tax returns, employment records, the lease, key customer and supplier contracts, registrations and licences, and details of any disputes or liabilities. Sellers who prepare these documents in advance — and fix obvious problems, like unsigned contracts or expired registrations — get through due diligence faster and with their price intact. Discovering problems mid-diligence is how prices get renegotiated downwards.
3. Negotiate and sign the contract of sale
The contract of sale is the heart of the deal. Beyond the price, it should clearly cover what is and isn't included in the sale, how the price is apportioned between goodwill, plant and stock, any deposit and conditions (such as finance or landlord consent), warranties the seller gives about the business, restraints of trade preventing the seller from immediately competing, and what happens to employees. This is not a document to sign from a template without advice — the warranties and restraint clauses in particular can follow you for years after settlement.
4. Deal with the lease
If the business operates from leased premises, the lease is often the make-or-break issue. Most commercial leases require the landlord's consent to assign the lease to the buyer, and landlords can impose conditions or ask for guarantees. For retail leases, state legislation sets out a formal assignment process with disclosure requirements. Start this conversation with the landlord early — a slow or unwilling landlord can delay or sink an otherwise agreed deal.
5. Sort out the employees
The contract needs to state clearly which employees the buyer will offer employment to, and on what terms. In an asset sale, employment with the seller ends at settlement and the buyer makes new offers; in a share sale, employment usually continues automatically because the employer (the company) hasn't changed. Either way, accrued entitlements — annual leave, long service leave — must be accounted for, typically through a price adjustment at settlement. Getting this wrong is one of the most common sources of post-settlement disputes.
6. Transfer licences, permits and registrations
Many businesses can't legally operate without licences that don't automatically transfer with the sale: liquor licences, food business registrations, industry licences, council permits and professional registrations. Check early which of yours are transferable, what applications the buyer needs to make, and how long approvals take — some take months. Business names, trademarks and domain names also need to be formally transferred at settlement.
7. Get tax advice before you sign
We are lawyers, not accountants — and the tax treatment of a business sale can significantly change what you actually keep. Capital gains tax, the small business CGT concessions, GST treatment of the sale (including whether the "going concern" exemption applies) and the difference between asset and share sale proceeds are all questions for your accountant. Get that advice before the contract is signed and the price is apportioned, not after.
8. Settlement
At settlement, the balance of the price is paid and ownership changes hands: the lease is assigned, assets and registrations are transferred, employees move across and the seller hands over the records, keys and systems the buyer needs to run the business. A detailed settlement checklist — agreed in the contract — keeps the day orderly and gives both sides a clear record of what was delivered.
Where a lawyer fits in
A good lawyer's job in a business sale is to protect the price you've agreed and make sure the deal doesn't come back to bite you. Our business and commercial lawyers handle the contract, due diligence, lease assignment and settlement — and we're happy to work alongside your accountant on the tax side.