Buying or selling a business is one of the most significant transactions a person can make, and it is often simpler to navigate than it first appears once the key legal steps are mapped out clearly. The structure of the deal, what is actually being sold, and how the contract is drafted all shape the outcome for both sides.
Whether the transaction involves a share sale, an asset sale, or a franchise, each method carries different obligations and protections. The parties involved, the contracts they sign, and the searches they carry out before exchanging are all part of a process that Business Queensland describes as involving reviews of contracts, records, expenses and operations.
As a Springfield law firm, we help clients across Greater Springfield and Ipswich with buying and selling businesses, from reviewing heads of agreement through to settlement.
Here is how the legal side of a business sale and purchase generally works in Queensland, and what both buyers and sellers need to consider.
Key takeaways
- An asset sale and a share sale are fundamentally different legal transactions.
- Due diligence typically covers contracts, financials, leases and staff obligations.
- Transfer duty applies to Queensland business assets under the Queensland Revenue Office rules.
This article is general information only and is not legal advice. Every situation is different, and you should speak with a solicitor about your own circumstances.
What is the difference between an asset sale and a share sale in Queensland?
In an asset sale, the buyer acquires the business assets rather than the entity that owns them. The selling company or person keeps their legal entity, including its history of liabilities, and the buyer takes what is specified in the contract: equipment, stock, intellectual property, customer lists, leases and goodwill, according to Business Queensland. In a share sale, the buyer acquires the company itself, with all its assets and liabilities, at a price set per share or in total under a share purchase agreement.
The distinction matters because it determines what the buyer inherits and what the seller retains. A sole trader cannot transfer an Australian Business Number, and an ABN cannot be transferred to a new owner at all, according to business.gov.au. In a share sale, the company's liabilities travel with it to the new owner, which is why due diligence covers the entity's full history. An asset sale lets a buyer choose what they acquire, leaving unwanted obligations with the seller.
"Most business buyers are surprised by how much the structure of the deal affects their exposure. Whether the contract is for assets or shares shapes everything from warranties to staff obligations to what duty applies."
Jade Kickbusch, Principal, Brookwater Legal
What does due diligence actually involve when buying a business in Queensland?
Due diligence is the process of reviewing the business before a purchase contract is finalised. Business Queensland says it can take anywhere from a week to several months, depending on the complexity of the business.
A buyer generally reviews four categories, according to Business Queensland:
- › Contracts: the sale contract, staff agreements, supplier and partner arrangements.
- › Financial records: income statements, profit and loss accounts and tax returns for at least three years.
- › Expenses: loans, utilities, leases and other ongoing liabilities.
- › Operations: intellectual property, stock levels, tools and equipment.
Business Queensland also notes that buyers commonly use a shared data room and non-disclosure agreements before sensitive documents are released. A sale contract can include a due diligence period allowing termination if a serious issue is found, which is commonly limited to five to ten business days after signing. Advisers including accountants, financial advisers and lawyers review reports, viability and risk.
What are the key legal protections buyers and sellers negotiate in Queensland?
A purchase contract for a business typically addresses warranties and indemnities from the seller, covering matters such as underpaid wages or superannuation, or unresolved supplier disputes, according to Business Queensland.
Business Queensland identifies several questions a buyer's lawyers typically raise in the draft contract:
- › Asset and liability transfer: what transfers and at what stated value.
- › Takeover date: when the buyer assumes responsibility.
- › Supplier arrangements: including any unwritten arrangements that would not automatically carry over.
- › Non-compete clause: whether the seller is prevented from opening a competing business.
- › Post-sale training: whether the seller provides a handover or training period.
These protections are negotiated in the purchase contract, not assumed to apply automatically. What is not written in is not binding.
How does transfer duty apply to a business sale in Queensland?
Transfer duty applies to business assets in Queensland. The Queensland Revenue Office says that business assets for duty purposes include goodwill, statutory licences, business names, franchise rights, Queensland debts, supply rights, intellectual property and Queensland personal property such as stock and plant.
The Revenue Office also notes that goodwill not specifically mentioned in a contract can still make the contract dutiable, and that agreements solely for debts, supply rights, intellectual property or personal property may fall outside duty. Interstate businesses are dutiable to the extent of their Queensland assets.
Transfer duty is separate from any tax consequences that arise from the sale structure. An accountant advises on the tax side; a solicitor advises on the duty and contract side.
How does buying or selling a business work in Queensland?
Step 1: Talk to us
Get in touch and we will explain how the process works for your type of transaction, whether that is an asset purchase, a share purchase or something in between.
Step 2: Structure, heads of agreement and due diligence
We advise on the deal structure and review any heads of agreement. Once due diligence is underway, we work through the contract and disclosure documents and flag any issues with the other side's lawyers or the business records.
Step 3: Drafting and negotiating the purchase contract
We draft or review the purchase contract, including warranties, indemnities, restraint of trade provisions and any conditions such as a due diligence period or finance condition. Negotiation happens between the parties' legal teams until the contract is agreed.
Step 4: Settlement and handover
Business Queensland describes settlement as involving an agreed date when ownership passes, along with handover arrangements and communication to customers. We handle the documentation at this stage and coordinate with any other advisers involved.
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When does buying or selling a business NOT follow this process?
Not every business transaction is a straightforward asset or share sale with a standard purchase contract. The process described above applies to a stand-alone business purchase between unrelated parties. Several situations change the picture significantly.
A franchise purchase sits outside the standard business purchase framework. Under the Franchising Code of Conduct, a franchisor must give the prospective franchisee a disclosure document, a copy of the Code and the franchise agreement itself at least 14 days before signing, according to the ACCC. There is also a 14-day cooling-off period after entering the agreement. A transfer of an existing franchise agreement triggers its own disclosure obligations between the outgoing and incoming franchisee, as the ACCC sets out.
A business that holds a retail shop lease is subject to the Retail Shop Leases Act, and the assignment of that lease to the buyer requires the landlord's consent, with a one-month response period under Queensland's Property Law Act, according to the Queensland Small Business Commissioner. The terms of the lease travel with the business and affect its value. A business sale and a lease assignment are two separate transactions that proceed together.
Where the business is a company, a share sale means the buyer inherits all of the company's history, including any undisclosed liabilities. The departure or appointment of directors requires notification to ASIC within 28 days, according to ASIC. An ABN cannot be transferred to a new owner, and where the business was operated by a partnership, the Partnership Act 1891 provides that a partnership ends when any partner changes unless the partners have agreed otherwise, according to Business Queensland.
What common mistakes do buyers and sellers make in business transactions?
The most consistent problem Business Queensland identifies is buyers who carry out due diligence after signing a binding contract rather than before, or who rely on a due diligence period in the contract that is too short to uncover material issues. By the time a problem is found, the buyer is in breach if they walk away without a valid contractual basis for termination.
For sellers, the equivalent mistake is failing to make warranties match the actual state of the business. A warranty in the purchase contract that turns out to be incorrect can give the buyer a claim against the seller after settlement. Sellers are also sometimes caught by employment obligations they did not know existed. The Fair Work Ombudsman notes that buyers need to check staff contracts and applicable awards as part of any acquisition, and that underpaid wages or superannuation can become the buyer's problem if not addressed at contract stage.
Frequently Asked Questions
What is the difference between an asset sale and a share sale in Queensland?
In an asset sale the buyer takes specific business assets; in a share sale the buyer acquires the whole company with all its liabilities, according to Business Queensland. The structure affects what the buyer inherits and what duty applies.
Does transfer duty apply when buying a business in Queensland?
Generally yes. The Queensland Revenue Office says business assets including goodwill, licences, intellectual property and Queensland personal property such as stock and plant are dutiable. A solicitor can confirm what applies to a particular transaction.
How long does due diligence take when buying a business in Queensland?
Business Queensland says due diligence can take anywhere from a week to several months depending on the complexity of the business. A due diligence condition in the contract typically allows five to ten business days after signing.
What happens to employees when a business is sold in Queensland?
Staff contracts and applicable awards are part of due diligence, according to the Fair Work Ombudsman. Underpaid wages or superannuation can become the buyer's liability if not addressed in the purchase contract before settlement.
What are the legal steps for completing a business purchase in Queensland?
Business Queensland describes the steps as a letter of intent, price negotiation, a binding offer, then a purchase contract drafted with advisers. Settlement follows on the agreed date when ownership passes and handover arrangements are completed.
Do you need a solicitor to buy or sell a business in Springfield or Ipswich QLD?
A solicitor reviews the purchase contract, advises on the deal structure, handles warranties and indemnities, and coordinates settlement. Our conveyancing team works with buyers and sellers across Greater Springfield and Ipswich on business transactions.
What is a letter of intent and is it legally binding in Queensland?
A letter of intent records the proposed price, terms and conditions before a binding contract is signed. Business Queensland describes it as non-binding, though it may include an exclusivity period and conditions such as finance or a satisfactory due diligence review.
Your Next Steps
Buying or selling a business in Greater Springfield or Ipswich is a significant step, and the legal structure of the deal shapes the outcome well beyond the settlement date. Getting the contract, the due diligence scope and the warranties right from the start protects both sides and avoids disputes after the handover.
If you're working through a business sale or purchase, the right advice early makes the process simpler. Contact the Brookwater Legal team or call (07) 3437 8555 to talk through where you stand.
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External Resources
Brookwater Legal · This article contains general information only and does not constitute legal advice. It does not take into account your individual circumstances. You should obtain legal advice about your own situation before acting on anything in this article. Liability limited by a scheme approved under Professional Standards Legislation.
