Why selling your business takes more than just a buyer and a price tag 

...and why you shouldn’t leave legal planning until the last minute 

Selling your business is a major milestone, but it’s rarely as simple as shaking hands and signing papers. It’s a legal process that, if not handled carefully, can lead to delays, disputes, or even financial loss. 

Whether you’re planning to sell soon or in several years, getting your legal matters in order early is essential.

Here’s what you need to know: 

1.  Start with your legal structure 

Whether you’re a sole trader, partnership, company, or trust, how your business is set up will impact how the sale moves forward. 

• If you’re selling a company, the Corporations Act 2001 comes into play, setting out obligations for directors and shareholders. 
• If your structure involves trusts or partnership agreements, these may include clauses that restrict how and when ownership can be transferred. 

Overlooking these details can delay a sale or breach existing shareholder or partnership agreements or director duties. A lawyer can help you identify what applies to your situation and what action to take. 

2.  Get your records in shape 

Buyers will want to see accurate, up-to-date information about your business such as financial statements, tax records, employee entitlements, contracts, and licences. 

It is also legally important as inaccurate or misleading information can trigger claims under Australian Consumer Law for deceptive conduct. 

Preparing your records early also makes the due diligence phase smoother and boosts buyer confidence. 

3.  Understand the due diligence process 

Due diligence is where a buyer examines your business in detail to assess its value and risks. As the seller, you’re legally required to disclose material facts about your business including debts, legal disputes, or anything that may affect the transaction. 

Failure to disclose critical information can result in breach of contract claims or even the deal falling through. A lawyer can help you meet your disclosure obligations clearly and confidently. 

4.  Don’t sign a sale contract without legal advice

The contract of sale is the foundation of the deal. It outlines what’s included with the business (e.g. assets, goodwill, IP, liabilities), how and when payments are made, and what obligations exist after settlement. 

It should also cover: 

• Restraints of trade 
• Warranties and indemnities 
• Adjustments for entitlements (like leave or rent) 

You will need a lawyer to draft or review the contract to ensure your interests are protected and there are no hidden risks to ensure there are no unfavourable or missing clauses or ongoing liabilities after sale.

5.  Check permits, licences, and leases 

Does your business rely on a lease, licence, or franchise agreement?

Here are some things to consider:

• These might not automatically transfer with the sale. 
• You may need landlord or regulatory approval. 
• Franchises must comply with the Franchising Code of Conduct, which has strict disclosure requirements. 

Failing to transfer these correctly can disrupt operations or delay settlement. 

6.  Handle employee matters carefully 

Employees are a major part of most businesses, and selling doesn’t automatically release you from obligations. 

You’ll need to consider: 

• Whether employees will stay on with the new owner.
• How accrued leave, super, and redundancy will be handled .
• Compliance with the Fair Work Act 2009.

Missteps with your employees can lead to serious financial and legal consequences. This is why early legal planning is crucial!

7.  Understand the tax implications 

Selling a business can have significant tax consequences, including: 

• Capital gains tax (CGT) 
• Goods and Services Tax (GST) 
• Stamp duty (depending on what’s being sold and where) 

You may be eligible for small business CGT concessions (but only if you plan properly). 

Early legal and tax advice can help you structure the sale in a way that maximises your return and minimises tax liabilities. 

8.  Know the difference between an asset and share sale

This is one of the first major legal decisions you’ll face: 

• In an asset sale, you sell specific parts of the business (e.g., stock, equipment, client lists). 
• In a share sale, the buyer takes over the entire company entity (its assets and liabilities). 

Each option has its own pros and cons, and legal implications, including how contracts, licences, and employees are handled. 

Choosing the wrong structure in this instance can lead to legal headaches, tax problems, or unwanted liabilities.

Why you shouldn’t wait 

Ideally, legal planning should begin 12–24 months before you expect to sell. Early preparation gives you time to tidy records, resolve liabilities, and address structural issues.  

Even if you’re years away from stepping back, the best time to start preparing is now. Many legal and financial decisions take time to implement effectively, and the earlier you begin, the more options you’ll have. 

A well-planned exit: 

• Protects what you’ve worked so hard to build
• Avoids last-minute legal problems 
• Makes your business more attractive to buyers 

Selling your business is not just a financial transaction, it’s a legal one too. Good legal advice ensures that your transition is smooth, your risks are managed, and your future is protected. 

Need help selling your business? 

Our experienced legal team can help you navigate the sale process from start to finish – ensuring your legacy is protected and your next chapter begins with confidence. Plus, our colleagues at Aintree Group Accounting can provide tax advice as well where needed!  

See how our Accounting team can also help…

This is general advice only and has not been prepared with your situation and needs in mind. For individual and personalised advice, we highly recommend that you seek out proper professional advice from your accountant and lawyer.