The sale or purchase of a business is one of the most significant commercial transactions a business owner will undertake. The decisions made before contracts are signed determine whether the transaction protects your interests or exposes you to ongoing liability, including: what is being sold, what is excluded, what warranties are given, how the price is paid, what happens to staff and leases.
Citilawyers acts for both buyers and sellers in business sales across Sydney and New South Wales. Our commercial lawyers advise on transactions ranging from the sale of a single café or retail shop through to share sales of established trading companies, with a focus on identifying risk early and structuring the deal to protect our client’s commercial position.
A business sale in NSW typically takes one of two forms:
Asset sale: The buyer purchases the business’s assets, goodwill, plant and equipment, stock, intellectual property, customer lists, and the right to assume contracts, but not the legal entity itself. The seller retains the company and any historical liabilities. This is the most common structure for small and medium business sales.
Share sale: The buyer purchases the shares in the company that owns the business, taking on the entire entity, including all assets, contracts, employees, and any existing liabilities. Share sales are more common in larger transactions where the corporate structure has commercial value (long-standing contracts, regulatory licences, tax attributes).
The choice between asset sale and share sale has significant implications for stamp duty, capital gains tax, employee entitlements, and ongoing liability. The right structure depends on the specific business, the parties’ commercial objectives, and the regulatory environment.
The contract for sale of business is the central document of the transaction. It sets out the parties, the assets being transferred, the purchase price and payment terms, the warranties and indemnities, the conditions precedent, and the completion arrangements.
Standard form contracts (such as the Law Society of NSW Contract for Sale of Business) provide a starting point, but every transaction requires tailored special conditions to address the specific risks of the business being sold. Issues commonly negotiated include:
Due diligence is the buyer’s investigation of the business before contracts are exchanged. It is the buyer’s primary protection against undisclosed liabilities, overstated revenue, and misrepresented assets.
A thorough due diligence covers:
For sellers, preparing a “vendor due diligence” pack before going to market reduces the risk of price chips and gives buyers confidence in the disclosures.
Most business sales are conditional on the buyer obtaining the landlord’s consent to assign the existing premises lease. Under the Retail Leases Act 1994 (NSW) and the general law, the landlord cannot unreasonably refuse consent, but the process can be slow, and the landlord may impose conditions (security bonds, personal guarantees, refurbishment obligations).
The lease assignment is often the critical path item in completing a business sale. Early engagement with the landlord, and a clear plan for the assignment, can prevent the transaction from being delayed or derailed at the eleventh hour.
Sellers are typically required to give a restraint of trade, agreeing not to compete with the business sold for a defined period, within a defined geographic area. The enforceability of restraints depends on whether they go no further than reasonably necessary to protect the legitimate interests of the buyer, applying the cascading restraint principles under the Restraints of Trade Act 1976 (NSW).
A poorly drafted restraint can be unenforceable. A well-drafted restraint protects the goodwill the buyer has paid for.
The treatment of employees depends on whether the sale is an asset sale or a share sale:
The Fair Work Act 2009 (Cth) imposes additional obligations on “transfer of business”, including the recognition of prior service for accrued entitlements where the buyer offers employment on substantially similar terms.
In NSW, stamp duty is generally payable on the dutiable assets transferred in a business sale under the Duties Act 1997 (NSW). Goodwill, intellectual property, and certain other business assets are dutiable. Landholder duty may apply to share sales where the company holds NSW land.
Capital gains tax (CGT) and the small business CGT concessions also significantly affect the seller’s net position. Citilawyers works alongside our clients’ accountants and tax advisors to ensure the transaction is structured efficiently.
The Personal Property Securities Register (PPSR) records security interests over personal property. Before completion, the buyer must search the PPSR and obtain releases from any registered secured parties to ensure the assets are transferred clean. Failure to obtain releases can result in the buyer purchasing assets subject to a third-party security interest.
For more on PPSA risks, see our cash flow and debt minimisation lawyers page.
A typical NSW business sale follows this pathway:
Many business sale disputes arise after completion, when the buyer discovers something they were not told, or the seller fails to comply with their restraint. Common post-completion disputes include:
Where post-completion disputes arise, our business disputes lawyers act for both buyers and sellers in negotiation, mediation, and Supreme Court proceedings.
Our business sale lawyers in Sydney act for:
We provide:
Whether you are buying or selling a business, early legal advice protects your position. The structural decisions made before contracts are signed often determine the commercial outcome of the transaction.
Get clarity on your rights, obligations, and risks before committing to a business sale or purchase. Contact us online or call (02) 9233 7737 for a confidential discussion with our Sydney business-sale lawyers.
The sale or purchase of a business is one of the most significant commercial transactions a business owner will undertake. The decisions made before contracts are signed determine whether the transaction protects your interests or exposes you to ongoing liability, including: what is being sold, what is excluded, what warranties are given, how the price is paid, what happens to staff and leases.
Citilawyers acts for both buyers and sellers in business sales across Sydney and New South Wales. Our commercial lawyers advise on transactions ranging from the sale of a single café or retail shop through to share sales of established trading companies, with a focus on identifying risk early and structuring the deal to protect our client’s commercial position.
A business sale in NSW typically takes one of two forms:
Asset sale: The buyer purchases the business’s assets, goodwill, plant and equipment, stock, intellectual property, customer lists, and the right to assume contracts, but not the legal entity itself. The seller retains the company and any historical liabilities. This is the most common structure for small and medium business sales.
Share sale: The buyer purchases the shares in the company that owns the business, taking on the entire entity, including all assets, contracts, employees, and any existing liabilities. Share sales are more common in larger transactions where the corporate structure has commercial value (long-standing contracts, regulatory licences, tax attributes).
The choice between asset sale and share sale has significant implications for stamp duty, capital gains tax, employee entitlements, and ongoing liability. The right structure depends on the specific business, the parties’ commercial objectives, and the regulatory environment.
The contract for sale of business is the central document of the transaction. It sets out the parties, the assets being transferred, the purchase price and payment terms, the warranties and indemnities, the conditions precedent, and the completion arrangements.
Standard form contracts (such as the Law Society of NSW Contract for Sale of Business) provide a starting point, but every transaction requires tailored special conditions to address the specific risks of the business being sold. Issues commonly negotiated include:
Due diligence is the buyer’s investigation of the business before contracts are exchanged. It is the buyer’s primary protection against undisclosed liabilities, overstated revenue, and misrepresented assets.
A thorough due diligence covers:
For sellers, preparing a “vendor due diligence” pack before going to market reduces the risk of price chips and gives buyers confidence in the disclosures.
Most business sales are conditional on the buyer obtaining the landlord’s consent to assign the existing premises lease. Under the Retail Leases Act 1994 (NSW) and the general law, the landlord cannot unreasonably refuse consent, but the process can be slow, and the landlord may impose conditions (security bonds, personal guarantees, refurbishment obligations).
The lease assignment is often the critical path item in completing a business sale. Early engagement with the landlord, and a clear plan for the assignment, can prevent the transaction from being delayed or derailed at the eleventh hour.
Sellers are typically required to give a restraint of trade, agreeing not to compete with the business sold for a defined period, within a defined geographic area. The enforceability of restraints depends on whether they go no further than reasonably necessary to protect the legitimate interests of the buyer, applying the cascading restraint principles under the Restraints of Trade Act 1976 (NSW).
A poorly drafted restraint can be unenforceable. A well-drafted restraint protects the goodwill the buyer has paid for.
The treatment of employees depends on whether the sale is an asset sale or a share sale:
The Fair Work Act 2009 (Cth) imposes additional obligations on “transfer of business”, including the recognition of prior service for accrued entitlements where the buyer offers employment on substantially similar terms.
In NSW, stamp duty is generally payable on the dutiable assets transferred in a business sale under the Duties Act 1997 (NSW). Goodwill, intellectual property, and certain other business assets are dutiable. Landholder duty may apply to share sales where the company holds NSW land.
Capital gains tax (CGT) and the small business CGT concessions also significantly affect the seller’s net position. Citilawyers works alongside our clients’ accountants and tax advisors to ensure the transaction is structured efficiently.
The Personal Property Securities Register (PPSR) records security interests over personal property. Before completion, the buyer must search the PPSR and obtain releases from any registered secured parties to ensure the assets are transferred clean. Failure to obtain releases can result in the buyer purchasing assets subject to a third-party security interest.
For more on PPSA risks, see our cash flow and debt minimisation lawyers page.
A typical NSW business sale follows this pathway:
Many business sale disputes arise after completion, when the buyer discovers something they were not told, or the seller fails to comply with their restraint. Common post-completion disputes include:
Where post-completion disputes arise, our business disputes lawyers act for both buyers and sellers in negotiation, mediation, and Supreme Court proceedings.
Our business sale lawyers in Sydney act for:
We provide:
Whether you are buying or selling a business, early legal advice protects your position. The structural decisions made before contracts are signed often determine the commercial outcome of the transaction.
Get clarity on your rights, obligations, and risks before committing to a business sale or purchase. Contact us online or call (02) 9233 7737 for a confidential discussion with our Sydney business-sale lawyers.
It depends. Asset sales are simpler, allow the buyer to leave behind historical liabilities, and are common for small business sales. Share sales preserve the corporate entity, keeping contracts, licences, and employment relationships intact and are typical for larger or licence-dependent businesses. The choice has significant tax, duty, and liability implications and should be made with both legal and accounting advice early in the process.
A straightforward small business sale typically takes 3 to 6 months from heads of agreement to completion. Medium and large transactions involving due diligence, landlord consent, and regulatory approvals often take 6 to 12 months. Share sales involving complex tax structuring or third-party consents can take longer.
Due diligence is the buyer’s investigation of the business before exchange, covering financial accounts, contracts, leases, employment, IP, PPSR, and litigation. It is the buyer’s primary protection against undisclosed risks. A buyer who skips due diligence to “save costs” frequently ends up paying considerably more in post-completion disputes. Even for small business purchases, a focused legal due diligence is essential.
A restraint of trade is a clause prohibiting the seller from competing with the business sold, working for competitors, or soliciting customers and staff, for a defined time and within a defined area. Restraints are enforceable in NSW under the Restraints of Trade Act 1976 (NSW), provided they go no further than reasonably necessary to protect the buyer’s legitimate interests. The Court will read down an overly broad restraint to the extent it is reasonable.
Generally, yes. Under the Duties Act 1997 (NSW), stamp duty is payable on the dutiable assets transferred in a business sale, including goodwill, business intellectual property, and certain other assets. Stock and book debts are generally not dutiable. Landholder duty may apply to share sales where the company holds significant NSW land. Stamp duty rates and exemptions change from time to time, current advice should be obtained at the structuring stage.
Standard warranties cover title to the assets, accuracy of financial accounts, no undisclosed liabilities, compliance with laws, accuracy of disclosed contracts, employee entitlements, and no pending litigation. Each warranty creates potential post-completion liability. Sellers can manage warranty risk through disclosure schedules, caps on liability, time limits, and retention amounts held in escrow.
