Buying or selling a business in Queensland: step-by-step

Step 1: Agree terms in principle

Price, what is included, stock treatment, the handover period and any restraint are settled in principle first — usually in a short letter of offer or heads of agreement. Keep it expressly subject to contract so nobody is bound before advice is taken, and get accounting input on asset sale versus share sale at this point rather than after signing.

• Price and how stock at settlement is valued and paid for
• Plant and equipment list, with leased items identified separately
• Deposit amount and who holds it (a trust account, not the seller)
• Proposed settlement date and the conditions the deal will hang on

Step 2: Sign a conditional contract

The contract is signed early, but conditional. The conditions are what protect a buyer: due diligence to the buyer's satisfaction, finance, landlord consent to assignment of the lease, transfer of any licence, and training and handover. Each condition needs a date, and each date needs to be realistic for the people who actually have to do the work.

Deposit goes into a trust account and is released on settlement, not before. Sellers should resist releasing it early no matter how confident the buyer sounds.

Step 3: Due diligence and the document request

Due diligence starts with a written request to the seller for documents, sent as a single itemised list rather than in dribs and drabs. The checklist above sets that list out. The seller should expect to produce three years of financials and tax returns, the lease and any variations, employee records, equipment and finance schedules, licences, and supplier and customer contracts.

Searches run in parallel: PPSR against the seller entity, its directors and any vehicle or machinery serial numbers; ASIC company searches; council and licensing checks; and a title or lease search where land is involved.

Step 4: Landlord consent to assignment

This is the usual bottleneck. For a retail shop lease the landlord is entitled to information about the buyer, and the buyer must be given a disclosure statement and provide a financial and retailing skills statement. Start the process the week the contract is signed — not once due diligence finishes — because landlords routinely take four to six weeks and their solicitor prepares a deed of assignment that everyone has to sign.

• Buyer's financial position, business experience and references to the landlord
• Disclosure statement to the buyer, with the statutory timing observed
• Deed of consent and assignment prepared and circulated for signing
• Bank guarantee or bond swapped over, and the seller's guarantee released

Step 5: Satisfy conditions and go unconditional

Each condition is either satisfied, waived or extended in writing before its date. Silence is not satisfaction, and a missed date can hand the other side a right to terminate. Where due diligence turns up something material, the options are to negotiate a price adjustment, require it to be fixed before settlement, add a retention, or walk away while the condition still protects you.

Step 6: The settlement document request

About two to three weeks out, the buyer's solicitor sends a written settlement requisition — a list of everything to be produced or done at settlement. It is answered in writing, and the deal is not ready until each item has an answer.

• Signed deed of assignment of lease, plus the landlord's written consent
• Assignment of the business name, domain names and any trade mark
• PPSR release letters from every financier with a registered interest
• Transfer or fresh grant of licences and permits, and confirmation from the regulator
• Employee entitlement figures certified as at settlement, for adjustment
• Signed transfers for vehicles, and payout figures for equipment finance
• Assignments or consents for key supplier, customer and software contracts
• Keys, alarm codes, passwords, and access to accounts, socials and the Google Business Profile
• Signed GST going concern acknowledgement, where that treatment applies

Step 7: Stocktake, adjustments and settlement day

Stock is counted the evening before or the morning of settlement, valued at cost and excluding anything obsolete, and the figure is added to the settlement statement. Employee entitlements, rent, outgoings, utilities and prepaid licences are adjusted on the settlement date.

Settlement itself is usually electronic or by exchange between solicitors: funds are transferred, releases handed over, and the keys and passwords released to the buyer. The deposit is then paid out from trust to the seller.

Step 8: After settlement

The buyer notifies suppliers, updates registrations and insurance, and confirms the PPSR releases actually appeared. The seller lodges its final BAS and tax returns, cancels registrations it no longer needs, keeps records for the statutory period, and confirms in writing that guarantees given to landlords and suppliers have been released.

Business sale process FAQs