Purchasing a Business

By Board Director Neville Heresford

Are you are looking to purchase a business?

Here is a checklist to help you think through some of the more common legal and other considerations.

  1. Due diligence: Before purchasing, you must conduct due diligence to be satisfied that the business is in a good financial position, has good standing in the community and can be operated by a new owner as a going concern. This means a thorough review of financial statements, tax returns, checking the condition of any plant and equipment.
  2. Business structure: You must consider in which entity the business will be purchased. There are taxation and liability considerations to acquiring the business individually, or through a company, trust, partnership or a combination of these.
  3. Contracts: You should review all contracts related to the business, including employment contracts, leases, supplier contracts, franchise agreements etc.
  4. Licenses and permits: Each industry will have its own licencing requirements. If the licence is attached to the vendor, you must check that it can be transferred to you and that you can meet all regulatory requirements. You should also check that the land is zoned appropriately for your business purpose or the Council have given approval for the business to be operated.
  5. Lease: If the business is operated on a leased premises, you should review the lease carefully and ensure that the duration of the lease enables you to operate the business for an acceptable length of time. It is also prudent to introduce yourself to the landlord as soon as possible as you may be dealing with them for many years.
  6. Goodwill and Intellectual property: You should identify where the goodwill in the business lies and ensure that is being transferred to you as part of the transaction. Some businesses will have goodwill attached to a logo or brand name. Others, especially smaller businesses will have goodwill attached to the premises, or even an email address or phone number. You must ensure all valuable trademarks such as business names and logos have been appropriately registered through ASIC and IP Australia.
  7. Employees: You must review all employment contracts to ensure that they meet national employment standards. Adjustments will need to be made for leave entitlements including long service leave.
  8. Debts and liabilities: You will need to determine which debts belong to the vendor and the debts for which you will continue be liable. Searches will need to be performed on the vendor to ensure that any registered debts are released on settlement.


Purchasing a business can be daunting, so it is important to engage with suitably qualified professionals including your solicitor, accountant, financial planner and business advisor. Connecting and engaging with appropriate professionals will make the job easier, clearer and reduce risk.