Business & commercial

Buying & selling a business in Victoria.

Buying a business means inheriting its contracts, its staff, its lease and its problems, so the real work happens before the deposit, in due diligence. Selling one means presenting it cleanly and protecting yourself after settlement. CMK Legal in Richmond acts on business sales and purchases across Melbourne, from small owner-operator transfers to share sales with earn-outs, warranties and restraints of trade.

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Solicitor-drafted

Sale contracts and due diligence reports drafted by a commercial lawyer, not a broker.

Practical timeframes

Standard transactions moved from instructions to contract within one to two weeks.

Fixed fee, quoted first

Fixed fee for standard sales, quoted before any work begins.

Australian commercial law

Corporations Act, Australian Consumer Law and Victorian leasing law.

What a business sale actually involves.

The first decision is structural: an asset sale or a share sale. An asset sale lets a buyer pick up the parts of the business they actually want, stock, plant, goodwill, the customer list, and leave the entity's history, and often its liabilities, behind. A share sale transfers the company whole, including whatever sits inside it, but keeps existing contracts, licences and the lease in place without needing third-party consent for each one. Neither is automatically better; the right answer depends on the contracts involved, the tax outcome and how much unknown risk sits inside the entity.

Due diligence is where a buyer earns the price they end up paying. That means the financials against the tax returns, the customer and supplier contracts and whether they survive a change of ownership, the lease and whether it can be assigned, staff entitlements and whether they transfer or are paid out, intellectual property ownership, and any litigation, WorkCover claims or regulator interest sitting quietly in the background. We run or review that process and translate what we find into contract protections, not just a list of worries.

The contract is where risk is allocated once the business case is settled. Warranties about the state of the business, indemnities for known risks, a restraint of trade stopping the seller competing, and, where price depends on future performance, a properly drafted earn-out with a retention or escrow arrangement. These clauses are usually where a sale is won or lost, and they are the reason a template contract downloaded for free ends up costing far more than a properly drafted one.

Start the landlord's consent to assign the lease on day one, not after the contract is signed. It is routinely the slowest part of a business sale, and a late request can push out an otherwise ready settlement by weeks.

What protects you in a business sale.

Due diligence that finds the real risks

Financials, contracts, staff entitlements, licences, IP and litigation checked properly and reported in plain English, so the price and the warranties reflect what you are actually buying.

Asset sale or share sale, decided deliberately

We compare the tax outcome, the liability position and the contract consequences of each structure, and tell you plainly which one serves you better and why.

Warranties, restraints and earn-outs that hold up

The clauses that decide what happens after settlement, restraint of trade, indemnities, retention amounts and earn-out mechanics, drafted so they are enforceable, not just impressive on paper.

Lease and staff handled without delay

Landlord consent to assignment started early, and staff entitlements, transferring or being paid out, dealt with clearly in the contract, so settlement is not held up by either.

Talk to us before you sign if.

  • You have received or are about to sign heads of terms for a business sale or purchase
  • You are buying a business that leases its premises
  • The price depends partly on future performance (an earn-out)
  • The business has employees whose entitlements need to be dealt with
  • You are unsure whether an asset sale or a share sale suits you
  • The seller is asking you to sign a restraint of trade, or you are the seller giving one
  • You are buying through a company, trust or with a business partner
  • Finance approval is conditional on the sale contract terms

A heads of terms or letter of intent is not binding paperwork; it sets the deal the contract will be built around. Getting the structure and the key terms right at that stage saves rounds of expensive renegotiation later.

How a business sale runs.

  1. 01

    Scope and quote

    We confirm whether it is an asset or share sale, the timeframe, and quote a fixed fee in writing.

  2. 02

    Due diligence

    Financials, contracts, lease, staff, licences and IP reviewed and reported on in plain English.

  3. 03

    Contract negotiation

    Sale contract drafted or reviewed, with warranties, indemnities, restraints and earn-out terms negotiated.

  4. 04

    Conditions satisfied

    Finance, landlord consent, licence transfers and any regulatory approvals cleared before settlement.

  5. 05

    Settlement and handover

    Adjustments calculated, funds and documents exchanged, and post-completion obligations tracked to close-out.

Transparent business sale fees.

Standard owner-operator business sales and purchases are quoted as a fixed fee covering the contract and settlement. Share sales, earn-outs and matters requiring extended due diligence are quoted as a scoped estimate once we understand the transaction, with any third-party costs, such as landlord or franchisor fees, listed separately.

Request a fixed-fee quote

FAQs

Buying & selling a business FAQs.

Still unsure? Call us on (03) 9008 7224 and speak to a lawyer, not a call centre.

Should I do an asset sale or a share sale?
Asset sales are usually cleaner for buyers because they leave the company's history and liabilities behind, and are common for smaller owner-operator businesses. Share sales are often preferred by sellers because they dispose of the whole entity, including its tax position, and are common where key contracts or licences cannot easily be transferred. We advise on the trade-off for your specific transaction.
What does due diligence actually cover?
The financial statements against tax returns and BAS, key customer and supplier contracts and whether they survive a change of control, the lease and its assignability, staff entitlements, equipment condition and title, intellectual property ownership, and any current or threatened litigation or regulatory issues.
Do I take on the seller's employees?
Often, yes, particularly in an asset sale where continuity of employment is preserved and accrued entitlements such as annual leave transfer with the employee. The contract needs to state clearly whether entitlements transfer to the buyer or are paid out by the seller at settlement; silence here is a common source of post-settlement disputes.
Is the lease automatically transferred to the buyer?
No. Assignment of a commercial or retail lease requires the landlord's consent, and the landlord can usually impose reasonable conditions, including requiring the incoming tenant to meet a financial standard or provide a bank guarantee. Because this can be the slowest step in a sale, we start the assignment process as soon as the contract is signed.
What is an earn-out and when is one used?
An earn-out ties part of the purchase price to the business's future performance after settlement, commonly used when a seller is confident about growth the buyer is not yet willing to pay for upfront. Earn-outs need careful drafting around how performance is measured, who controls the business during the earn-out period, and what happens if targets are disputed.
How long does a typical business sale take?
A straightforward owner-operator sale usually settles within four to eight weeks of a signed contract, subject to finance and any landlord consent. Share sales and transactions involving earn-outs, franchisor consent or extensive due diligence commonly take longer, and we scope realistic timeframes at the outset.
Is GST payable when I buy or sell a business?
Often it does not have to be. Under the GST Act the sale of a business can be treated as the supply of a going concern, which is GST-free where the conditions are met: the buyer is registered for GST, the parties agree in writing that the sale is of a going concern, the seller supplies everything necessary for the business to keep operating, and the seller carries the business on until settlement. Because it turns on the contract wording and the facts, it is worth getting right before signing rather than leaving to be argued at settlement.
How is the price split between goodwill, plant and stock?
The way the price is apportioned between goodwill, plant and equipment, and stock matters to both sides, because each is treated differently for tax. Sellers and buyers usually prefer different splits, so where the parties reach agreement it is recorded in the contract, which gives each of them a defensible basis for their tax position. It is one of the things worth settling as part of the negotiation rather than after.
Do I need to give the buyer a statement before selling a small business in Victoria?
You may. In Victoria the sale of a small business below a set value requires the seller to give the buyer a statement of information, with financial details and certain documents attached, before the contract is signed. Whether it applies depends on the price and the type of business, and getting it wrong can give the buyer a right to walk away, so it is one of the first things to check when you are selling.
Will a restraint of trade on the seller be enforceable?
A restraint stopping the seller from competing after the sale is enforceable in Australia where it goes no further than is reasonably necessary to protect what the buyer has paid for, which is usually the goodwill of the business. Restraints are commonly written in tiers of area and time so a court can read down one that is too wide rather than strike it out. The scope needs to be set carefully, because a restraint that reaches too far can end up protecting nothing.
What happens to the business assets and any security over them?
In an asset sale the contract has to identify exactly what is included, such as plant, stock, goodwill and intellectual property, and deal with anything the seller supplied on credit or that is subject to a registered security. Buyers should check the Personal Property Securities Register so they take the assets free of someone else's interest, and a seller with finance or retention of title over equipment needs that released at settlement. Sorting this out beforehand avoids paying for assets that are still encumbered.

Related services.

Commercial contracts

Agreements drafted, reviewed and negotiated across every part of your business.

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Shareholder & partnership agreements

Control, dividends, deadlock and exit settled between owners before it matters.

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Commercial leasing

Retail and commercial leases negotiated and reviewed for tenants and landlords.

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