How To Sell Your Business: A Step-By-Step Guide For Owners

Deciding to sell your business can be a big moment - sometimes it’s a proud “we’ve built something valuable” milestone, and sometimes it’s a practical decision to move on, reduce risk, or focus on a new opportunity.

Either way, if you’ve found yourself searching “sell my business”, you’re usually looking for clarity: what do I actually need to do, and how do I avoid nasty surprises (like a deal falling over, disputes about what’s included, or getting stuck with liabilities you thought you’d left behind)?

In this guide, we’ll walk you through a straightforward, Australia-specific process for selling a small business - with a strong focus on the legal steps that protect you and help the sale complete smoothly. (It’s general information only, not legal, tax or financial advice - and it’s worth speaking with your accountant early as well, because the tax outcomes can differ significantly depending on the deal structure.)

Step 1: Get Clear On What You’re Selling (And How You’re Selling It)

Before you talk numbers or start advertising, you’ll want to get very clear on the structure of the deal. In Australia, business sales generally happen in one of two ways:

Option A: Asset Sale (Most Common For Small Businesses)

An asset sale is where the buyer purchases specific business assets (and sometimes agrees to take on certain liabilities), such as:

• plant and equipment
• stock
• business name and branding
• website, domain names and social media accounts
• customer lists and goodwill
• leases (if assigned) and supplier relationships (if transferred)

This option is popular because you can define exactly what is included and excluded. The legal document that usually governs this is an Asset Sale Agreement.

Option B: Share Sale (Selling The Company Itself)

A share sale is where the buyer purchases your shares in the company. The company continues to own the assets and remains the contracting party with customers, landlords, suppliers and staff - just with a new owner.

This approach can be simpler in some operational ways (contracts might not need to be transferred), but it can feel riskier for buyers because the company’s history comes with it. Share sales are common when you’re selling a company with valuable licences, a long trading history, or contracts that can’t easily be assigned.

If you’re selling a company, you may need to deal with steps around transferring shares (even if it’s not to family - the process issues are similar), and you should be very clear about what warranties you’re giving about the company’s compliance and liabilities.

Why This Step Matters

If you skip this “what exactly am I selling?” stage, you risk getting deep into negotiations only to find the buyer expects a share sale, you expected an asset sale, and both sides have priced and planned the deal differently.

Getting clarity early also helps you understand what documents you’ll need, what consents might be required (like landlord approval), and what liabilities you might still carry after settlement. It can also affect tax outcomes (for example, GST treatment and potential CGT implications), so make sure you’re getting accounting advice on the structure as well as legal advice on the contract.

Step 2: Prepare Your Business For Sale (So Due Diligence Doesn’t Derail The Deal)

Most business sales don’t fall over because the buyer changes their mind overnight - they fall over because due diligence uncovers issues that weren’t disclosed, weren’t documented, or weren’t fixable quickly.

The best way to protect your sale price (and your timeline) is to prepare like a buyer is going to ask tough questions - because they will.

Create A “Sale Ready” Information Pack

Think of this as your internal checklist. Common items include:

• profit and loss statements and balance sheets (ideally for the last 2-3 years)
• BAS statements and tax returns (where available)
• details of staff, roles, pay rates and leave balances
• key supplier agreements and customer contracts
• lease documents (and any incentives, options, rent reviews)
• asset register and equipment lists
• details of licences, permits, and approvals

Check What Security Interests Are Registered Against Your Assets

If your business has financed equipment, vehicles, or inventory, there may be security interests registered against those assets. A buyer may check this, and it can delay settlement if releases aren’t organised.

It’s often worth running a PPSR check early so you know what will need to be paid out or discharged before completion. (Keep in mind fees and access options can vary depending on how you do the search, so focus on getting the right search done early rather than relying on any “free” option.)

Review Your Key Contracts (And Fix Gaps Where You Can)

Buyers pay for certainty. If your revenue relies on handshake deals or vague terms, a buyer may discount your price (or insist on heavy “earn-out” conditions).

Even if you’re selling soon, it can still be worth tidying up core documents such as:

• customer terms (so income is contract-backed)
• supplier agreements (so margins and supply are stable)
• employment agreements (so staffing obligations are clear)

If you have employees, properly documenting arrangements with an Employment Contract can also reduce the risk of last-minute disputes about entitlements and transfer terms. (Employee transfer issues can be complex in practice - for example, whether employment is terminated and re-hired, whether entitlements are paid out or recognised by the buyer, and whether “transfer of business” rules apply - so it’s important to get tailored advice for your situation.)

Consider A Legal Due Diligence “Pre-Check”

If you want to reduce the chance of the buyer discovering issues first (and using them to renegotiate), you can do your own legal health check before going to market. This can also make your disclosures more accurate and controlled.

Where it suits the transaction, a Legal Due Diligence Package can help identify gaps and common deal-breakers early, while you still have time to address them.

Step 3: Value Your Business And Choose Your Deal Terms

Business value is not just “last year’s profit x a multiplier”. In the small business space, the sale price is often influenced by how dependent the business is on you personally, and how easily the buyer can take over without revenue dropping.

Common Factors That Affect Price

• Financial performance: stable revenue and clean, verifiable expenses usually support stronger pricing.
• Owner dependence: if you’re the main salesperson or the only person who knows the systems, buyers may see risk.
• Recurring revenue: subscription or retainer-style income is often valued higher than one-off work.
• Documented processes: SOPs, training materials, and clear supplier relationships can boost confidence.
• Assets and IP: brand reputation, domains, customer data, and trade marks can add real value.

Decide What You Want From The Deal (Not Just The Price)

When you’re thinking about how to sell your business, don’t focus only on the headline number. Also decide what matters to you commercially and personally, such as:

• Do you want a quick clean exit, or are you open to staying on for a handover period?
• Do you want all cash at settlement, or would you consider staged payments?
• Are you willing to sign restraint clauses (non-compete and non-solicitation), and for how long?
• Do you want to keep certain assets (like a vehicle, website, or brand) out of the sale?

These points become part of the negotiation - and they also shape the legal documents that need to be drafted.

Step 4: Negotiate The Sale (And Manage Risk While The Buyer Investigates)

Once you start negotiating with a buyer, you’ll usually move through a phase where information is shared, due diligence happens, and the contract is negotiated.

This stage can feel like the deal is “basically done” - but legally, it’s often the stage where you’re most exposed if you don’t control the process.

Use Confidentiality Before You Share Sensitive Information

You may need to show the buyer financials, supplier terms, customer lists, pricing, and other commercially sensitive information. You’ll generally want confidentiality terms in place before disclosing anything that could be used to compete with you if the deal doesn’t proceed.

Be Careful With “Handshake” Offers

Even when both sides are acting in good faith, misunderstandings happen quickly in business sales. It’s common for buyers and sellers to believe they agreed on the “main points”, only to discover later they meant different things by:

• stock valuation (at cost? at retail? included or extra?)
• what “equipment” includes
• handover support duration
• whether employee entitlements are included

This is why putting terms into a proper written agreement matters - it reduces ambiguity and helps keep negotiations focused on facts.

Plan For Consents And Third Parties

Many business sales require third-party approvals, such as:

• landlord consent to assign a lease
• franchisor consent (if it’s a franchise business)
• supplier consent if contracts can’t be transferred freely
• finance discharge from lenders

These steps can take weeks. If you don’t factor them in early, settlement can be delayed - or the buyer may walk away.

Step 5: Put The Right Legal Documents In Place (And Get To Settlement)

The legal paperwork is where business sales either become smooth and predictable - or stressful and risky.

At a high level, the “right” documents will depend on whether you’re doing an asset sale or share sale, whether staff are transferring, and whether there are leases, licences, or finance arrangements involved.

The Core Contract

Most small business sales are documented with a business sale agreement that covers the commercial terms and legal protections for both sides.

Depending on your deal, this may be prepared as a full Business Sale Agreement (or reviewed and negotiated if the buyer provides the first draft). If you already have a contract, a Business Sale Agreement Review can help you understand what you’re signing and what to push back on.

Key Clauses To Expect (And Negotiate)

• Purchase price and adjustments: including stock adjustments and apportionments.
• What’s included: clear lists of assets, IP, stock, and any exclusions.
• Restraints: what you can and can’t do after the sale (time, location, and scope).
• Warranties and indemnities: statements you’re making about the business (and what happens if they’re untrue).
• Conditions precedent: steps that must occur before settlement (like landlord consent).
• Handover obligations: training, introductions, transition support, and timeframes.

Don’t Forget The “Practical” Legal Steps

Even after the contract is signed, there’s often a list of actions that must happen before completion. This commonly includes:

• assigning leases and key contracts
• organising employee transfer (and confirming/agreeing how entitlements will be dealt with)
• handing over domains, logins, and IP assets
• paying out finance and discharging securities
• finalising stocktake (if relevant)

Many sellers find it helpful to work through a structured completion checklist so nothing is missed in the rush to settle.

Watch Out For Finance And Security Documentation

If the buyer is funding the purchase, there may be security documentation involved (for example, a lender taking security over business assets). Sometimes, sellers are asked to accept deferred payments or vendor finance, which has its own risks and documentation needs.

In deals involving secured obligations, understanding how a General Security Agreement works can help you spot where risk is sitting - and whether you’re comfortable with the structure. If you’re considering vendor finance, it’s also worth getting specific legal and financial advice on how repayments will be secured and what happens if the buyer defaults.

Key Takeaways

• Selling a small business in Australia usually involves either an asset sale or a share sale, and the right structure depends on what you’re selling and what liabilities you want to keep (or avoid).
• Getting your business “sale ready” before you go to market helps due diligence run smoothly and can protect your sale price.
• Clean records, clear contracts, and early checks (including PPSR checks where relevant) reduce delays and last-minute renegotiations.
• Negotiations often turn on the details - like stock valuation, employee entitlements, leases, restraints, and handover obligations - so it’s important to document terms clearly.
• A well-drafted business sale agreement (and a proper completion checklist) helps you reach settlement with fewer surprises and better legal protection.

If you’d like help selling your business, you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no-obligations chat.