Selling a business in Queensland or any other part of Australia can be a complex process, and it is important to consider the legal implications of the sale as well as other factors such as price and inclusions. 

Here are some of the key things to consider from a legal perspective when selling your business:

Start with advice

The first step when selling your business is to gather your team of experts and have some upfront discussions. These specialists include your: 

• Accountant, who can help you share financial details and figure out tax implications
• Business valuer, who can help you determine how much the business is worth 
• Business broker, who can help you put together a strategy for sale, find a buyer and negotiate the final price
• Lawyer, who can help you prepare and negotiate the terms of sale

Be aware that the process to sell a business can take several months and involve a lot of phone calls and meetings. You need to work with individuals you feel you can communicate well with. 

Legal structure

Before selling your business, it is important to clearly understand its legal structure, as this can impact the sale process. Whether your business is a sole proprietorship, partnership, or company, each structure comes with different legal and tax obligations as well as different levels of risk for the buyer. Clarifying the structure of your business and being able to communicate it will help your buyer make a decision and an offer.

You may also need to clarify how much of the business is for sale; for example are you selling your shares as a co-founder or owner, or are you selling in its entirety to a new owner?

Due diligence

Before selling your business, it is important to conduct due diligence. This involves looking at your business through a potential buyer’s eyes, to identify any potential risks or liabilities that could affect the sale. 

The due diligence your buyer will carry out will include reviewing financial records, contracts, leases and other important documents. Your NPR Law representative and your accountant can help you gather the information relevant to due diligence so your sale process is smoother.

Drafting the sale agreement

Your sale agreement is a critical document that sets out the terms and conditions of the sale. 

It is important to ensure that this agreement is comprehensive and addresses all of the key issues related to the sale, such as the purchase price, payment terms, warranties, and indemnities. 

Never attempt to complete a sale agreement on your own if you don’t have the relevant legal experience. Your NPR property lawyer will provide essential advice as you prepare the sale agreement and negotiate with the buyer’s legal team to ensure the deal delivers a ‘win/win’ outcome for all parties. 

Legal requirements and existing contracts

When selling a business in Australia, there are a number of legal requirements. For example, if the business has employees, you will need to comply with employment laws and regulations. You may also need to obtain or be clear about various permits or licences and existing contracts with suppliers, depending on the nature of your business. A specialist from NPR Law can help you to understand this side of things so you can proceed with confidence.

Tax implications

Selling a business can have tax implications, and it is important to have an idea of how much tax you can expect to pay before proceeding with the sale. For example, capital gains tax may apply to the sale of certain assets, and there may be other taxes or duties that need to be paid. Talk to your tax accountant to get some estimates so you don’t end up being surprised with a bill at the end of the sale process. 

Intellectual property 

If your business has intellectual property (such as trademarks, patents, or copyrights), it is important to consider how this will be kept or exchanged during the sale process. You may transfer ownership of the intellectual property to the buyer or include provisions in the sale agreement that protect your intellectual property rights. Your lawyer’s advice is essential to protect your intellectual property during the sale process, so make sure you share all the relevant details.