Buying or selling a business involves more than agreeing on a price. A business may include goodwill, equipment, stock, a lease, a business name, supplier agreements, licences and employees. The transaction must identify what is being sold, how it will be transferred and which obligations each party will assume.
This guide explains business conveyancing in New South Wales (NSW), how it differs from property conveyancing, the main stages of a business settlement and the factors that affect its timing.
Business conveyancing is the legal work involved in transferring a business from one owner to another. It includes preparing and negotiating the sale contract, conducting due diligence, arranging the transfer of relevant assets and completing settlement. Business conveyancing NSW also requires attention to state-specific requirements, such as duty rules and retail lease obligations.
A business sale in New South Wales is usually structured in one of two ways:
In an asset sale, the buyer acquires the agreed assets of the business rather than the entity that owns them. Any liabilities the buyer agrees to assume should be expressly identified, subject to obligations imposed by law.
In a share sale, the buyer acquires shares in the company that operates the business. The company continues to own its assets and remains responsible for its liabilities, so its history and obligations require careful investigation.
The chosen structure affects the contract, tax, employee arrangements and the risks assumed by each party. Obtain legal and accounting advice on the structure before signing any binding agreement.
Yes. Property conveyancing generally concerns the transfer of an interest in land and is governed by legislation including the Conveyancing Act 1919 (NSW). For residential property, prescribed disclosure requirements apply. The process generally includes reviewing the contract, investigating title, exchanging contracts and completing settlement.
Business sales require a different investigation. Although standard business sale contracts are available, the contract must reflect the particular business and transaction. There is no single register that establishes ownership of all business assets, and due diligence is needed to verify what is being acquired. Specific disclosure requirements may apply, including those relating to retail leases and franchises.
The main practical differences include:
Assets transferred: Property conveyancing generally concerns land and associated rights. An asset sale may involve tangible and intangible business assets, with different transfer requirements for each.
Third-party consent: Business sales often require landlord consent to a lease assignment, franchisor approval or regulatory approval. Property transactions may also require consent, depending on the interest being transferred.
Employees: A business sale may affect employment arrangements and accrued entitlements, which must be addressed in accordance with applicable law.
Ongoing obligations: A business sale may involve post-settlement warranties, enforceable restraints of trade, training obligations and amounts retained from the purchase price.
Duty: Land transactions generally attract transfer duty, subject to applicable exemptions and concessions. Many business assets in NSW are no longer dutiable, but transactions involving land, leases or other dutiable property require assessment.
If the sale includes the business premises, the business and property transactions must be coordinated. Each component has its own contractual and legal requirements.
The process follows similar stages in many transactions, although the work required depends on the business, the sale structure and the approvals needed.
A standard contract may provide a starting point, but it must be adapted to the transaction. A properly prepared business sale contract will generally address:
The purchase price and its allocation between goodwill, plant and equipment, stock and any land or lease interest.
The assets included in the sale and any express exclusions.
The deposit, who holds it and when it may be released or refunded.
Conditions that must be satisfied before completion, such as landlord consent, regulatory approval, finance approval or franchisor approval.
Warranties concerning financial records, equipment, the lease and undisclosed liabilities.
The treatment of employees and their entitlements.
Any proposed restraints of trade, including their scope, duration and enforceability.
Any training or handover the seller must provide before or after settlement.
The settlement date, adjustments and the consequences of a failure to complete.
Due diligence allows the buyer to investigate the business before becoming unconditionally bound to proceed. It may include reviewing financial statements, tax returns, bank records, customer and supplier contracts, equipment ownership, the lease, intellectual property and employee records. Searches of the Personal Property Securities Register help identify registered security interests. Any necessary releases should be arranged before settlement.
Sellers should also review their records and obligations before offering the business for sale. Identifying and resolving problems early can reduce delays and disputes during negotiations.
The parties must identify which licences, permits, registrations and approvals the business requires. Depending on the activity and the relevant rules, these may need to be transferred, varied, reissued or obtained afresh. Some approvals cannot be transferred, and a sale contract alone does not authorise the buyer to trade.
Where the business operates from leased premises, the lease is a central part of the transaction. Check its assignment provisions and obtain any required landlord consent. The landlord may assess the proposed tenant and seek appropriate security, subject to the lease and applicable law. For retail premises, the Retail Leases Act 1994 (NSW) contains specific assignment and disclosure requirements. The parties should also address whether the outgoing tenant and any guarantors will be released from future obligations.
Employee arrangements depend on the sale structure. In a share sale, the employing company usually remains the same. In an asset sale, employees may be offered employment by the buyer, and the transfer of business provisions of the Fair Work Act 2009 (Cth) may apply if the statutory requirements are met.
Where employment transfers, prior service generally counts towards most entitlements, including personal and carer’s leave. The treatment of annual leave and redundancy can depend on whether the employers are associated entities and whether prior service must be, or is, recognised. Long service leave requires separate consideration under the applicable legislation and industrial instruments.
The contract should identify employment offers, notice obligations, entitlements payable by the seller and any agreed adjustments for obligations assumed by the buyer. The parties cannot contract out of employees’ statutory rights, and applicable awards and enterprise agreements must also be considered.
Stock is often valued separately from the agreed price for other assets. The contract should specify how and when it will be counted and valued, whether a maximum value applies and how obsolete or damaged stock will be treated. A joint stocktake or independent valuation can help avoid disputes.
Settlement adjustments allocate agreed expenses and receipts between the parties. Depending on the transaction, they may cover rent, outgoings, utilities, equipment lease payments, prepaid fees and employee entitlements assumed by the buyer. The contract should also address cash, unbanked takings, deposits, gift vouchers and lay-by obligations.
NSW abolished transfer duty on many business assets, including goodwill and intellectual property, from 1 July 2016. However, duty may still arise where the transaction involves land or an interest in land, including a lease transfer or assignment, and certain goods or fixtures transferred with dutiable property. Exemptions and valuation rules may apply. Where duty is payable, the buyer should obtain advice on the amount and payment deadline, generally within three months of the liability arising.
Goods and services tax (GST), capital gains tax and any available small business concessions should be considered before the contract is signed. Whether a sale qualifies as a GST-free supply of a going concern also requires advice. The sale structure and allocation of the price can affect the tax outcome, so the parties’ solicitors and accountants should coordinate their advice.
Conveyancing for business sale matters can involve a licensed conveyancer, a solicitor or both. A licensed conveyancer in NSW may undertake business sale work that falls within the statutory definition of conveyancing work and the conditions of their licence. The appropriate representative depends on the structure and complexity of the transaction.
A solicitor is generally appropriate where the transaction also requires advice on matters such as:
Share sales and company liabilities.
Business structures, shareholder agreements and trusts.
The scope and enforceability of restraints of trade and confidentiality obligations.
Employment arrangements and employee entitlements.
Franchise agreements and the Franchising Code of Conduct.
Tax issues requiring coordination with an accountant.
Disputes arising before or after settlement.
Confirm at the outset that your representative can advise on the whole transaction or arrange any additional specialist advice required.
There is no fixed settlement period for a business sale. The parties agree on a timeframe that allows for due diligence, finance and any required consents or approvals. As a broad guide only:
A straightforward asset sale with no lease assignment or regulatory approvals may settle within four to six weeks after exchange.
A small business sale involving a lease assignment may take six to twelve weeks after exchange, depending on landlord consent and documentation.
A sale involving regulated activities may take several months if approval or a new licence is required.
A franchise sale must allow time for franchisor approval and any applicable disclosure and cooling-off requirements.
A share sale or larger acquisition may take several months, depending on due diligence and transaction complexity.
These estimates are indicative and should not be treated as guaranteed timeframes. Negotiating preliminary terms, investigating the business and finalising the contract before exchange may add substantial time. The settlement date should reflect the requirements of the particular transaction.
Common causes of delay include landlord consent, regulatory approvals, incomplete financial records and finance approval. Identifying these requirements early helps the parties agree on a realistic timetable.
Seek legal advice before signing a business sale contract or any preliminary agreement intended to be binding. Your adviser should explain what is being transferred, the conditions for completion and any obligations that continue after settlement.
For enquiries, contact Brydens Lawyers on 1800 848 848 or through our contact page to confirm the assistance available for your matter.
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