Sale Of A Going Concern: Legal Steps For Australian Business Owners

Selling your business is a big milestone. If you’ve spent years building customer relationships, refining systems, and getting your operations running smoothly, it makes sense to want the sale process to be just as “smooth” as the business itself.

That’s where a sale of a going concern can come in. In Australia, selling a business this way is a common approach for small businesses because it can reflect the true value of what you’ve built - not just the individual assets, but the whole operating business.

But while the phrase sounds straightforward, there are legal and practical steps you need to get right. The details of what’s included, how the handover works, and what risks you keep (even after settlement) usually depend on the contract and how the deal is structured.

Below, we’ll walk you through how a business is sold as a going concern in Australia, the legal steps you should expect, and what to focus on so you can reduce disputes and keep the transaction moving.

What Is a Sale of a Going Concern?

A sale of a going concern generally means you’re selling a business that is operating and will continue operating after the sale - just under new ownership.

In practical terms, a business sold as a going concern often includes more than just “stuff” like stock and equipment. It usually includes things like:

• the goodwill of the business (brand reputation, customer base, online presence)
• key assets (plant and equipment, stock, intellectual property, domain names)
• the benefit of key contracts (supplier contracts, customer contracts, leases - where transferable)
• systems and processes (operating manuals, procedures, workflows)
• employees and workforce arrangements (in many cases, subject to specific rules and award/enterprise agreement requirements)

You might also hear people describe this as a business being “sold as a going concern” or “selling as a going concern”. In each case, the idea is that the buyer is stepping into an already-running operation, rather than buying a bundle of disconnected assets.

Is “Going Concern” Mainly a Tax Concept?

You’ll often hear “going concern” discussed in a GST context. While tax outcomes can be a key driver for structuring the deal this way, there’s also an important commercial meaning: the buyer is paying for a business that can continue generating revenue without needing to rebuild everything from scratch.

From a GST perspective, it’s also important to know that “GST-free sale of a going concern” is a specific legal/tax concept under the GST rules, and it won’t apply automatically just because the business is operating. There are conditions that commonly need to be satisfied, including (in broad terms):

• the parties agree in writing that the sale is of a going concern
• the buyer is registered (or required to be registered) for GST
• you supply to the buyer all things necessary for the continued operation of the enterprise
• you carry on the enterprise until the day of supply (generally, until settlement)

It’s worth getting tailored accounting advice about GST and tax treatment, because the correct treatment depends on your circumstances and how the deal is documented. Sprintlaw can help with the legal documentation and structuring, but this article isn’t tax advice.

From a legal perspective, your main focus is making sure the sale contract accurately documents what’s being sold, what’s excluded, and what must happen before settlement.

When Is a Business Sold as a Going Concern (And When Is It Not)?

Not every business sale is a sale of a going concern. Some transactions are structured as an asset sale only (where the buyer cherry-picks certain assets and leaves the rest behind), while others are share sales (where the buyer buys shares in the company that owns the business).

Many small businesses in Australia are sold as going concerns when:

• the buyer wants continuity (same premises, same staff, same systems)
• the business has strong goodwill that’s tied to ongoing operation
• there are important contracts that the buyer needs to take over (or re-sign)
• the lease can be assigned (or a new lease is offered) so the location continues

Common Examples

• Retail shop: buyer takes over the lease, staff, POS system, stock, supplier relationships and brand goodwill.
• Café or restaurant: buyer needs the premises, fit-out, licences, supplier contracts and trained team to keep trading quickly.
• Service business: buyer needs customer contracts, booking systems, phone number, website, and transition support from you.

Situations Where It Might Not Be a “Going Concern” Sale

A sale may not function as a going concern (even if someone uses that phrase casually) where:

• the buyer is only purchasing equipment/stock (and not goodwill or operations)
• the business stops trading before settlement and is not capable of continuing immediately
• key inputs can’t be transferred (for example, the lease can’t be assigned and there’s no alternative premises)

Because the label alone doesn’t do the legal work, the safest approach is to treat a “sale of a going concern” as a business outcome you must build into your deal documents and your handover plan.

Step-By-Step: Legal Steps To Selling a Going Concern in Australia

Every sale has its own moving parts, but most sale of going concern transactions follow a similar legal pathway.

1) Decide What You’re Actually Selling (Assets, Shares, Or Both?)

Before you negotiate price and terms, you need clarity on the deal structure:

• Asset sale: buyer purchases selected business assets and goodwill, and you keep the “seller entity” (and any liabilities not assumed by the buyer).
• Share sale: buyer purchases shares in the company that owns the business (meaning the company - and its history - remains).

Many small business sales are asset sales, documented through an Asset Sale Agreement or a tailored business sale contract, because it can be simpler to define what transfers and what doesn’t.

2) Identify The “Deal Assets” (And Any Exclusions)

A common cause of disputes is mismatched expectations: you think you’re selling “the business”, and the buyer thinks they’re getting everything. Or vice versa.

We often recommend preparing a clear schedule (usually annexed to the contract) that lists:

• plant and equipment (with serial numbers where possible)
• stock and how it will be valued at settlement
• intellectual property (business name usage, domain names, logos, operating manuals)
• social media accounts and marketing collateral
• customer lists (and what privacy rules apply)
• any excluded items (cash in till, certain debts, old stock, personal tools, vehicles)

3) Work Through Due Diligence (And Be Ready To Prove Your Numbers)

In a sale of a going concern, the buyer is usually buying ongoing earning capacity - so they will want to verify the business’s performance and risks.

Due diligence often covers:

• financials (BAS, P&L, balance sheet, sales reports)
• key contracts and recurring revenue sources
• employee arrangements and any disputes
• licences, permits, and compliance status (which can differ between states/territories and industries)
• equipment ownership (and whether anything is financed or secured)

If you want a guided, structured approach (and to reduce back-and-forth late in the process), a Legal Due Diligence Package can help you understand what should be checked, what should be disclosed, and what should be negotiated into the contract.

4) Put The Terms In Writing (This Is Where Deals Are Won Or Lost)

Handshake agreements are not enough for a business sale. You’ll typically need a formal Business Sale Agreement (or equivalent) to set out the commercial deal and the legal protections.

Key terms usually include:

• Purchase price and deposit (including any adjustments)
• What’s included (assets, goodwill, IP, stock, systems)
• Restraints (non-compete / non-solicitation clauses where appropriate)
• Training and handover support (how many hours/days, over what period)
• Conditions precedent (for example, lease assignment approval, finance approval)
• Warranties and disclosures (what you promise is true, and what you’ve told the buyer)
• Settlement process (timing, documents, keys, passwords, access)

This is also the point where you want to be careful about any “standard template” contracts. A going concern sale often has business-specific moving parts - especially around staff, leases, licences, and digital assets.

5) Address The Lease, Licences, And Consents Early

For many bricks-and-mortar businesses, the deal lives or dies on whether the buyer can operate from the same premises.

That can involve:

• assignment of lease (landlord consent process, disclosure documents, timing)
• new lease negotiations (if assignment isn’t available)
• transfer or re-application of licences (depending on industry and state/territory rules, and whether the licence is transferable at all)

Even if you and the buyer are aligned, third parties (like landlords, franchisors and regulators) can add time and risk - so it’s best to build realistic timeframes and clear responsibilities into the contract.

6) Finalise Security Interests And PPSR Risk

If any equipment, vehicles, or other assets are financed, there may be a security interest registered over them. Buyers will often want confirmation that assets are transferred free of encumbrances, or they will require a payout and release at settlement.

In some cases, the buyer may also register their own security interest post-sale (for example, if vendor finance is involved). Depending on the deal, you might also see a General Security Agreement used to secure obligations.

Where relevant, taking steps to register a security interest correctly can be important to protect the parties and avoid later enforcement issues.

7) Plan Settlement And The Handover Like a Project

Settlement isn’t just “sign and done”. For a sale of going concern, settlement often includes a checklist-style handover of operational control.

A good settlement plan might cover:

• banking terminals, merchant accounts, and POS access
• handover of email addresses, domain names, website admin access
• transfer of phone numbers
• stocktake process (if required)
• keys, alarm codes, access cards
• supplier introductions and account transfers
• a communications plan (what staff and customers are told, and when)

When settlement is treated like a project with clear responsibilities, you reduce the risk of “post-sale surprises” that can trigger disputes.

Key Legal Documents You’ll Typically Need

Every transaction is different, but in many sale of going concern deals, the legal documents go beyond the sale contract itself.

Common documents include:

• Business sale contract: the main agreement setting out price, inclusions, warranties, restraints, and settlement mechanics.
• Assignment or new lease documents: if the business premises are part of the value of the sale.
• Deeds of release: often needed where you’re paying out finance and releasing secured interests over business assets.
• Employment documents: if staff are transferring or if you’re finalising termination and payout processes. The details can differ depending on whether the buyer is offering new employment, whether the sale is structured as an asset sale or share sale, and what modern awards/enterprise agreements apply. If you’re hiring or restructuring in the lead-up, having a compliant Employment Contract in place can reduce uncertainty.
• Privacy compliance materials: if customer data is part of the business value (mailing lists, CRM databases), you should ensure your Privacy Policy and data handling practices support lawful transfer and use (where permitted). In some cases, you may need to take extra steps (such as notices or consents) depending on what data is involved and how it was originally collected.
• Shareholder approvals (if applicable): if your business is operated through a company with multiple owners, the sale may require internal approvals under your Shareholders Agreement or constitution.

The goal is to make sure the written documents match what you and the buyer believe you’re doing - and that they create a practical pathway to complete the handover.

Common Risks When Selling as a Going Concern (And How to Reduce Them)

Even strong businesses can run into trouble during a sale if the legal details aren’t handled carefully. Here are some common risk areas we see.

Unclear Inclusions (Especially Digital Assets)

Modern small businesses often depend on digital assets: websites, domain names, online listings, social accounts, and email marketing tools.

If these aren’t clearly included (and transferable), a buyer may argue the going concern value wasn’t delivered - even if you handed over the keys and equipment.

Practical tip: list digital assets specifically in the sale documents and make sure you can actually transfer control (for example, check whether an account is tied to your personal email).

Employee Transition Misunderstandings

Employees can be one of the most valuable parts of a going concern - they hold knowledge, customer relationships, and operational continuity.

But employee transfer is also sensitive. You’ll want to understand (and document):

• who employs the staff pre- and post-settlement
• what happens to accrued entitlements (which can depend on the deal structure, any agreement between the parties, and the applicable workplace laws)
• whether the buyer is offering employment and on what terms
• what communications are planned and when

It’s worth planning this early so your staff aren’t left in limbo, and the buyer can confidently keep the business trading.

Overpromising in Warranties

Sale contracts commonly include warranties - statements you make about the business (for example, that accounts are accurate, there are no undisclosed disputes, the assets are owned by you, and so on).

If a warranty is incorrect, the buyer may have legal rights after settlement. This is why careful disclosure is essential. It’s usually better to disclose issues early (and address them in the contract) than to hope they won’t be noticed.

Not Managing Third-Party Approvals

Landlord consent, franchisor consent (if applicable), finance approvals, and licence transfers can all delay settlement or derail the transaction.

Practical tip: make these items conditions of the contract with clear deadlines, and keep evidence of the steps taken.

Mixing Up “Business Value” With “Asset Value”

In a sale of a going concern, the buyer is typically paying for the business’s ability to keep generating income. That usually means handover obligations matter: training, introductions, supplier onboarding, and transition support can be part of the value.

If the handover is vague, the buyer may feel they didn’t receive what they paid for - even if the legal ownership transferred correctly.

Practical tip: treat transition support like a deliverable (scope it, schedule it, and document it).

Key Takeaways

• A sale of a going concern is generally about selling an operating business that can continue trading after settlement - not just selling assets.
• To sell a business as a going concern successfully, you need clear agreement on what’s included (goodwill, contracts, staff arrangements, digital assets) and what’s excluded.
• Most transactions involve due diligence, third-party consents (like lease assignment), and a detailed settlement handover plan - these are often where delays happen.
• The sale contract is critical: it should deal with price, adjustments, warranties, disclosures, restraints, conditions precedent, and practical settlement steps.
• Security interests and financed assets should be identified early so releases (or new registrations) can be handled properly and the buyer receives clean title.
• If your business operates through a company with multiple owners, internal approvals under your governance documents may be required before the sale proceeds.

If you’d like help structuring or documenting a sale of a going concern, you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no-obligations chat.