9AM – 5:30PM

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L7, 10-14 Smith St

Parramatta NSW 2150

(02) 9635 7966

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We are leaders in commercial, private client, and government law

中文     25th October 2021

9AM – 5:30PM

Monday to Friday

L7, 10-14 Smith St

Parramatta NSW 2150

(02) 9635 7966

Call Us

Sale of Business

Buying or selling a business involves a number of complex legal and commercial issues.

It is important that you receive proper legal advice with respect to the preparation of legal documents and completion of the sale or purchase.

Our specialist commercial lawyers at MatthewsFolbigg can assist you.

What is involved in buying or selling a business?

A sale of business involves the transfer of the assets of the business to a new owner (the purchaser).  It is distinguished from a company sale which involves the transfer of shares in the company which holds the assets.

What assets are sold as part of the business?

The assets of the business which are typically transferred to the new owner include:

  • the goodwill of the business (i.e. its business name and reputation)
  • plant & equipment (e.g. machinery, photocopiers etc.)
  • stock-in-trade
  • leasehold or freehold interests in the business premises
  • intellectual property rights
  • key contracts and key personnel contracts

What is a preliminary agreement?

Before the parties enter into a binding legal agreement, they will usually document the ‘in-principle’ agreement in the form of a preliminary agreement (also known as a ‘letter of intent’, ‘heads of agreement’, ‘memorandum of understanding’ or ‘term sheet’).

The preliminary agreement will deal with such matters as the proposed purchase price and the number and class of shares to be sold, and will be incomplete in some respects.  It is important to consider whether most of the terms should be expressed as non-binding and ‘subject to contract’ (in any event, certain provisions should be expressed to be binding, such as confidentiality and exclusivity of negotiations).

What is due diligence?

Due diligence (DD) involves enquiries and investigations into the business. Prospective purchasers are advised to complete DD prior to entering into a binding commitment to purchase the business.

While financial DD is concerned with the identification and valuation of the business assets and the ongoing viability and profitability of the business, legal DD involves an examination of:

  • title to the assets of the business and any encumbrances over them
  • employee entitlements, superannuation liabilities and workplace claims
  • any litigation or claims affecting the business
  • licences and key contracts held by the business

What terms are usually included in the sale contract?

Documenting the terms of the sale is the most important part of the sale process.  The parties should not rely on a ‘standard agreement’ but instead should have a custom-made agreement which is tailored to the transaction in question.

The contract will deal with such matters as:

  • the duties and obligations of the parties
  • the purchase price and adjustments
  • conditions to completion
  • documents and records to be handed over on completion
  • warranties and indemnities
  • limitation of liability
  • grounds for termination
  • post-sale restrictions on the vendor
  • dispute resolution

What steps are involved in completion?

Completion (also known as settlement) is the fulfilment of the sale and purchase of the business.  It may occur at the same time as contracts are exchanged, or at a later date after the fulfilment of the conditions to completion.

In relation to the sale and purchase of a business, completion involves:

  • ensuring that all conditions to completion have been satisfied or waived by the parties
  • payment of the purchase price and handover of documents and records
  • transferring and registering the assets of the business in the name of the purchaser
  • payment of stamp duty (if applicable)

How can we help?

MatthewsFolbigg’s commercial lawyers are experts in the sale and transfer of business assets.   We have assisted both purchasers and vendors, across a vast array of industries, to achieve their business goals.

We have a team of solicitors, including accredited specialists in business law, who will provide you with practical and succinct legal advice and assistance.


We serve all of the legal needs of individuals, government and businesses, regardless of their complexity, throughout all of Sydney and beyond.

We are industry leaders, and we never lose sight of the outcome that you want. We guide you through the legal process to achieve that outcome.

Our growth and our success, comes from the growth and success of our clients.

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