To legally and financially prepare to buy a business in Australia, you need to complete due diligence, secure appropriate funding, structure the transaction correctly, and manage key obligations before and after settlement. Getting expert legal and financial advice early in the process helps reduce risk, improve outcomes, and save you time and money down the track.
Law Tram simplifies this process by connecting you with licensed Australian lawyers who understand the legal complexities involved in buying a business. In this blog, we’ll break down the essential legal and financial steps, outline common pitfalls, and explain how the right advice from day one can give you greater control and peace of mind when you’re looking to buy a business.
Quick Summary
- Legal due diligence helps uncover risks in contracts, leases, and liabilities
- Finance should be secured early and tailored to the business type and purchase structure
- A lawyer can help you negotiate key terms and structure the deal for tax and liability protection
- Finance brokers work with lawyers to ensure your funding aligns with your legal obligations
- Law Tram connects you with expert lawyers and can refer you to trusted finance partners like AS Mortgage Partners
Steps to Buying a Business in Australia
Business Purchase Checklist
Use this checklist to stay on track through every stage of the business buying process:
Step 1 – Understand What You’re Really Buying
When buying a business, it’s essential to understand exactly what’s included in the sale — and what’s not. The legal structure of the transaction will significantly impact your rights, responsibilities, and risk exposure. This is where legal due diligence becomes crucial.
Assets vs Liabilities
Most business purchases are structured as asset sales, meaning you buy selected assets of the business — such as equipment, stock, intellectual property, and goodwill — rather than the company itself. This can help limit your exposure to legacy issues like unpaid debts or unresolved legal disputes.
Key things to check if you want to buy a business:
- Is the business assigning its lease or will a new one be required?
- Are there any encumbrances or loans against the business assets?
- What’s the condition and fair value of plant, stock, or equipment?
- Are customer and supplier contracts transferable?
- Are there any warranties or ongoing liabilities?
Your lawyer will review the sale agreement and supporting documents to ensure the deal reflects what’s been agreed — and that you’re not inheriting hidden liabilities or compliance issues.
Business Structure and Risk
Some buyers choose to purchase the shares of a company, especially where client relationships, staff continuity, or licensing requirements are involved. While this can simplify transitions, it carries more risk, as you’re also acquiring all the company’s existing obligations and liabilities.
Your lawyer will help you:
- Understand the legal implications of a share sale vs an asset sale
- Identify any pre-existing liabilities through a structured due diligence process
- Negotiate terms such as indemnities, warranties, and price adjustments based on risk
Failing to conduct proper due diligence — or relying solely on the seller’s representations — is one of the most common reasons small business purchases go wrong. The right legal guidance protects you from taking on more than you bargained for.
Step 2 – Get Your Finance in Order
Securing finance is one of the most important — and time-sensitive — steps in the business buying process. Whether you’re purchasing a café, a consultancy, or a logistics company, you’ll need to fund the transaction in a way that aligns with your cash flow, growth plans, and legal obligations. The earlier you begin this step, the smoother your path to settlement will be.
Why Business Finance is Different
Unlike home loans, which are typically assessed on personal income and credit score, business finance is based on the commercial viability of the business you’re purchasing — as well as your own experience and financial position. Banks and lenders may evaluate:
- Trading history and profitability of the business
- Value and condition of business assets
- Risk profile of the industry
- Your prior business experience and qualifications
- Security offered (e.g. real estate, equipment, or business assets)
Some business buyers assume they can simply transfer an existing loan or rely on the business’s income from day one. In reality, lenders want to see a clear, risk-managed plan — and documents to back it up. Your lawyer and your finance broker should work together if you want to buy a business to ensure any financial commitments are consistent with the legal structure of the deal.
Work With a Trusted Finance Partner
This is where working with a broker who understands commercial lending is essential. AS Mortgage Partners is one of Law Tram’s trusted finance partners, with experience helping clients navigate the business purchase process from both a funding and documentation perspective.
A commercial finance broker can:
- Assess your borrowing capacity based on your situation and business goals
- Recommend appropriate loan products based on industry, risk, and repayment needs
- Prepare documentation for lender approvals, including forecasts and business valuations
- Coordinate with your lawyer to ensure the loan terms align with the sale agreement and timing of settlement
- Help you explore alternative finance options, including private lenders or equipment finance
If your purchase includes property — such as a retail premises or warehouse — you may also need both a commercial loan and a property loan arranged in parallel.
Working with the right team can streamline this process significantly. Your lawyer will review any loan agreements, security clauses, or personal guarantees, while your broker ensures the finance offer is competitive, timely, and tailored to your objectives.
Step 3 – Get the Legal Structure Right
How you structure the purchase can have long-term implications for tax, liability, asset protection, and operational flexibility. A lawyer will help you select and establish the right legal and ownership structure before the transaction is finalised — and ensure the sale documents reflect that structure accurately.
Entity Setup
In most cases, buyers purchase a business through a legal entity such as a company or discretionary trust rather than in their personal name. This allows for:
- Limited liability – shielding personal assets from business debts
- Tax efficiency – particularly where profits are shared or reinvested
- Succession flexibility – enabling future changes to ownership or control
Your lawyer can assist with registering the right entity, preparing the governing documents (like a shareholder agreement), and ensuring the entity is properly set up to sign the contract and hold the business assets.
For example, if you’re buying a business as a husband and wife team, your lawyer might advise using a company trustee for a family trust, giving flexibility in how income is distributed and protected.
Contract Terms That Protect You
Beyond the price, the terms of the sale contract are where many risks — or protections — are built in. A well-drafted agreement reflects your intentions, protects you against future disputes, and sets clear expectations for the seller.
Key protections your lawyer may negotiate include:
- Warranties – promises about the accuracy of financials, condition of assets, and compliance
- Indemnities – clauses that require the seller to cover specific future costs or liabilities
- Restraint clauses – preventing the seller from setting up a competing business
- Training or handover periods – ensuring a smooth transition
- Adjustment mechanisms – for stock values, working capital, or unpaid leave entitlements
Standard contract templates rarely offer enough protection. A contract lawyer can tailor these clauses to reflect your situation, reduce your exposure, and ensure settlement proceeds without surprise risks.
“Buyers often focus on the purchase price, but it’s the contract terms that define how protected you really are. Warranties, indemnities, and restraint clauses aren’t just legal fine print — they’re critical tools for risk management and clarity.”
— Inna Hall, Lawyer at Law Tram
Step 4 – Don’t Overlook Post-Sale Steps
Even after the business is legally yours, there are still important steps to complete — many of which can affect your ability to operate, stay compliant, or grow the business effectively.
Licences, Contracts, and Employees
Post-settlement legal tasks may include:
- Transferring business names, ABNs, and licences
- Assigning or renegotiating lease agreements
- Notifying customers and suppliers of the new ownership
- Managing the transfer or termination of employees
- Finalising any adjustments for rent, stock, or employee entitlements
Many of these require coordination with landlords, industry regulators, government bodies, and service providers. Your lawyer can manage these on your behalf or prepare the required documents when you buy a business.
Adjusting Your Loan or Capital Strategy
Post-settlement is also a time to reassess your working capital and loan structure. Your finance broker can review whether:
- The loan remains competitive for your growth needs
- Short-term funding (e.g. overdrafts or lines of credit) is required
- Equipment finance, vehicle leasing, or invoice factoring could support operations
- You need refinancing to consolidate start-up costs
Business purchases aren’t static events — they set the foundation for ongoing strategy. With continued legal and financial guidance, you can make smarter decisions in the crucial early stages of ownership.
Why Legal and Financial Advisors Should Collaborate
Buying a business requires both legal and financial input — and the best outcomes happen when those two areas are aligned from the start. A lawyer will protect your legal position, but they can’t advise on borrowing capacity or loan products. Likewise, a finance broker can help you secure funding, but they need to know the structure and timing of the deal to get it right.
That’s why Law Tram encourages collaboration between your lawyer and trusted financial specialists like AS Mortgage Partners. When your advisors work together, you can:
- Avoid delays caused by mismatched timelines or documentation
- Ensure your finance aligns with your legal structure and risk profile
- Make informed, strategic decisions about how to structure the deal
- Streamline your settlement process and reduce stress
Through Law Tram’s platform, you can start with legal support and access trusted referrals when financial advice is also needed — giving you a more coordinated and confident path to business ownership.
Buying a Business vs Starting One from Scratch
If you’re unsure whether to buy a business or build your own, it helps to compare the pros and cons of each approach.
- Buying a business gives you immediate access to existing customers, staff, revenue, and brand recognition. However, you may inherit issues such as outdated systems, debts, or existing lease terms.
- Starting your own business allows for complete control and a clean slate, but can take much longer to generate reliable cash flow and market traction.
A lawyer can help assess whether the business you’re considering is a strong foundation — or if starting from scratch may be the safer path for your goals and risk tolerance.
Real Example: What One Missed Clause Cost a Business Buyer
Amir, a first-time business buyer in WA, purchased a small logistics company. The contract included minimal handover obligations from the seller — something Amir didn’t fully understand until it was too late.
After settlement, the seller disengaged entirely, and Amir struggled to access key operational logins, supplier contacts, and customer records. What should have been a smooth transition turned into weeks of delays and lost income.
Had the contract included a clear handover clause with defined responsibilities and timeframes, this disruption could have been avoided. A lawyer would have flagged the risk during contract review — reinforcing why legal support isn’t just helpful, it’s essential.
Take the First Step Toward a Smarter Business Purchase
If you want to buy a business, Law Tram’s offers a secure, efficient, and supportive way to connect with expert legal help. Whether you’re buying your first business or expanding your operations, our platform ensures you receive tailored advice from qualified lawyers — without unnecessary upfront costs.
Frequently Asked Questions
Begin by clarifying your business goals, preferred industry, and budget. Conduct comprehensive market research to understand the sector and competition. Engage qualified professionals like accountants and lawyers early to assist with financial assessment and legal matters throughout the process.
A lawyer plays a critical role in reviewing the sale agreement, identifying potential legal risks, ensuring compliance with local laws, and guiding you through negotiations and contract finalisation. Their expertise helps protect your interests and prevents costly mistakes.
Due diligence is a detailed investigation of the business’s financial records, legal obligations, employee contracts, leases, licenses, and any potential liabilities. This process verifies the accuracy of information provided and uncovers any hidden risks before you commit.
A qualified accountant or professional valuer will analyse the business’s financial performance, assets, and market position. Their valuation report provides a basis for negotiating a fair price, helping you avoid overpaying or missing critical issues.
The purchase typically requires a formal sale and purchase agreement that clearly sets out terms, conditions, and responsibilities of both parties. You may also need to arrange the transfer of business registrations, licences, permits, and notify relevant authorities.
While it’s possible to purchase remotely, visiting the business location and meeting the current owners or managers gives valuable insight into operations, customer base, and potential challenges that may not be evident on paper.
Your sale agreement can include warranties and indemnities that hold the seller accountable for undisclosed problems. Your lawyer will ensure these protections are in place to give you legal recourse if necessary.
You’ll usually need to inform ASIC (Australian Securities and Investments Commission) about changes in business ownership or company details, update tax registrations with the ATO, and notify any other relevant regulatory bodies depending on the business industry.
The timeline varies depending on the complexity of the business, negotiations, and due diligence. Generally, it can take anywhere from several weeks to a few months to complete all legal, financial, and operational checks.
No. Until you sign the final contracts, you can withdraw from the process without penalty. Early steps, such as information gathering and due diligence, are designed to help you make an informed decision with no pressure to proceed.
