Selling a business in Australia: Steps for a smooth sale

Published Monday 2 February 2026

Table of contents

• Is selling your business the right decision?
• Should you hire professionals to sell your business?
• How to sell a business
• Common mistakes to avoid when selling your business
• Managing employees during a business sale
• Tax implications when selling your business
• Changing ownership
• Successfully selling your business takes time and preparation
• FAQs on selling a business in Australia

Key takeaways

• Start planning your business sale 12-18 months early to maximise your sale price by 20-30% and avoid rushed decisions that can reduce value.
• Prepare three years of clean financial statements, formalise supplier agreements and customer contracts, and document all internal processes to speed up the sale by 2-3 months and increase buyer confidence.
• Get a professional business valuation from an accountant, business broker, or professional valuer to set a competitive price and avoid overvaluing your business, which can scare off potential buyers.
• Organise all documentation before due diligence begins, including complete financial records, legal agreements, and a written business plan, to keep this 4-6 week process efficient and demonstrate you're well-prepared.

Is selling your business the right decision?

Deciding to sell your business is a big step. Your reasons might be personal, like retiring or seeking a better work-life balance. Or they could be financial, like wanting to cash in on your hard work or pursue a new opportunity. Whatever the reason, it's important to be clear on your goals.

Take some time to think about what you want to achieve from the sale. This will help you stay focused during the process and make sure the final outcome aligns with your vision for the future.

Should you hire professionals to sell your business?

Selling a business involves several tasks, from legal paperwork to financial negotiations. While you can go it alone, getting help from professionals can make the process much smoother. They can help you get your books in order, find the right buyer, and navigate the legal complexities.

Consider working with:

• A business broker to help you find potential buyers and negotiate the sale
• An accountant to prepare your financial documents and advise on tax implications
• A lawyer to handle the legal contracts and ensure a smooth transfer of ownership

How to sell a business

Selling your business is the process of transferring ownership to a buyer for payment. A well-planned sale maximises your business value and ensures a smooth handover. The process typically takes 6-12 months and involves six key steps leading up to the change in ownership:

1. Making a plan to sell your business

Business sale planning means preparing your business for sale before you need to sell. Starting early provides three key advantages:

• Maximise sale price: Proper preparation can increase your business value by 20–30%
• Reduce time pressure: Early planning prevents rushed decisions that cost money
• Improve business operations: Sale preparation identifies and fixes operational weaknesses

Keep your financial advisors close. Bookkeepers, accountants and tax professionals know how to sell a business. They'll help get your documentation in order, while also helping to make the sale tax-efficient. Don't have an accountant or bookkeeper?

Find one in the Xero advisor directory.

2. Preparing your documentation

Documentation preparation involves organising all business records that buyers will review. Proper documentation can speed up your sale by two to three months and increase buyer confidence. Focus on three critical areas:

Financial statements

Buyers require three years of financial statements to assess business performance:

• Profit and loss statements: Demonstrate consistent revenue and profitability
• Balance sheets: Show business assets, liabilities, and net worth
• Cash flow statements: Prove money comes from operations, not loans or asset sales

Supplier agreements and customer contracts

Where you can, renew agreements with customers and suppliers, especially if they're critical to business performance.

If there's a big client that represents half of your revenue, a prospective buyer is going to want to see they're locked in to using you. Similarly, if you have a great deal on supplies, get it in writing.

Internal processes

Formalise your ways of working. Write down how the business operates, who's responsible for what, what order things get done in, and what systems you use. Think of this as a manual for running the business that will help a new owner hit the ground running.

Break this work into smaller sections so it stays manageable. Document a different aspect of operations each week. If you have employees, have them write the parts that are relevant to their jobs.

3. Getting your business valued

Business valuation determines your company's market worth using proven financial methods. Professional valuers use three approaches to calculate fair market value, often adhering to International Valuation Standards (IVS) to ensure you price competitively while maximising returns.

Choose your valuation professional based on your sale type:

• Accountant valuation: Best for known buyers like employees or family members
• Business broker: Required when finding external buyers, includes marketing services
• Professional valuer: Most accurate for complex businesses or legal disputes

Three methods of business valuation

Business valuation methods calculate your company's worth using different financial approaches. Professional valuers select the most appropriate method based on your industry and business type:

• Asset-based methods: Use the balance sheet to calculate all assets minus liabilities, often for liquidation
• Earnings-based methods: Value the business by its profit- and cash-generation track record
• Market-based methods: Apply an industry multiplier to sales revenue to estimate value

A valuation is only a guideline for negotiations. The final transaction price is often influenced by factors such as your eagerness to sell, the buyer's strategic interests, and how easily buyers can secure financing.

4. Finding a buyer

Ideal buyers offer fair market value and support smooth business transitions. Evaluate potential buyers using these criteria:

• Financial capacity: Proven ability to complete the purchase
• Industry experience: Understanding of your business model and market
• Transition support: Willingness to work with you during handover
• Cultural fit: Values that align with your business and employees

Many owners sell their businesses to family members or employees, which means you already have a good relationship with the buyers. If that's not an option, you could approach your suppliers, customers or competitors. They all know the business, at least.

Your accountant may also be able to help find buyers. They generally have lots of entrepreneurs in their network. Bankers, lawyers and other business consultants may have suggestions too.

If there aren't any leads in your network, then brokering services can help you connect with buyers. They may choose to list your business with certain publications or databases.

5. Managing the offer

Once you've met some genuine prospects and given them a clear overview of the business, you might start fielding offers. If there are several prospects circling, try to give a fair timeline for everyone to submit an offer.

When selling a business, the offers you get will (or should):

• lay out the price
• identify conditions to be met before closing the deal and set a date for closing
• note any conditions to be met after closing
• specify how and when the money will be paid
• explain any training or support they need from you, and for how long

The offer may also suggest a time frame for due diligence, during which the buyer will run their own checks on the business to make sure they're getting what they expect.

Be aware that some prospects may only make an offer if you promise to negotiate solely with them for a period of time. Others may make the final offer contingent on the business performing well after handover. This is to protect against sales tanking once the owner has left.

Business brokers can be a big help in deciding which offers to entertain and what conditions to accept.

6. Due diligence

Due diligence is the buyer's detailed investigation of your business to verify all claims before finalising the purchase. This process typically takes four to six weeks and covers three areas:

Legal due diligence

They'll see if there is any pending or ongoing legal action against the business. They'll also check up on things like copyright, trademarks, patents or service agreements.

Financial due diligence

They'll dive into the business books to check that the financial statements are accurate. They may ask for additional reports and forecasts, or run some themselves. They'll also check the business credit rating and possibly the tax history of the business.

Commercial due diligence

Your buyer will also take a wider look at the business and the market it operates in to confirm there's still opportunity for growth. They'll review existing strategies and competitors and the overall business model to ensure the business will remain profitable.

How to speed up due diligence

Selling a business already takes time before you get to due diligence, so it helps to keep this step as efficient as possible.

If you want to speed up this step, provide a complete set of well-maintained financials, a file of agreements, and a written business plan (here's a template). Running your books on accounting software also allows you (or them) to generate more reports as needed.

Common mistakes to avoid when selling your business

Selling a business takes planning, but understanding the process helps you avoid common mistakes. A smooth sale often comes down to good preparation and realistic expectations.

Keep these points in mind:

• Poor financial records: Buyers need to see clean, organised books. Disorganised financials can create distrust and slow down the sale.
• Unrealistic price: Overvaluing your business can scare off potential buyers. Get a professional valuation to set a fair and competitive price.
• Not preparing for due diligence: Buyers will want to inspect every aspect of your business. Having your documents ready makes the process faster and shows you're organised.
• Neglecting the business: It's easy to get distracted by the sale, but letting business performance slip can lower its value. Keep operations running smoothly until the handover is complete.

Managing employees during a business sale

Your employees are a valuable part of your business, and their future is an important consideration during a sale. In Australia, you have legal obligations to your staff when ownership changes.

You'll need to make sure all employee entitlements, like annual leave and long service leave, are correctly calculated and paid out or transferred to the new owner.

Clear communication is also key. Keeping your team informed can help reduce uncertainty and maintain morale during the transition.

Tax implications when selling your business

When you sell your business in Australia, the profit you make is generally considered a capital gain, which means you'll need to pay capital gains tax (CGT). The amount of tax you owe depends on your business structure and how long you've owned it.

There are small business CGT concessions that may help reduce the amount of tax you need to pay, such as the option to reduce the capital gain on an active asset by 50%. It's a good idea to speak with an accountant or tax advisor to understand your obligations and explore any potential savings.

Changing ownership

Ownership transfer involves completing legal and tax obligations after the sale closes. You must complete these requirements within specified timeframes:

• File final tax returns: Submit business tax returns for the sale period
• Close GST accounts: Cancel GST registration with the Australian Taxation Office, which you must apply for within 21 days of ceasing business activities
• Declare capital gains: Report sale proceeds for capital gains tax assessment
• Update company records: Amend ownership documents with ASIC; after a transfer is submitted, ASIC will typically cancel their registration within 28 days

Again, a business broker, accountant or bookkeeper will help make sure you tick all the boxes. An accountant can also provide tax planning around the sale to help keep control of the taxes you have to pay.

Successfully selling your business takes time and preparation

Early preparation is essential for successful business sales. Most small businesses need 12–18 months to complete sale preparation. Break the process into manageable phases:

• Phase 1 (Months 1–6): Organise financial records and update agreements
• Phase 2 (Months 7–12): Document processes and refresh business plans
• Phase 3 (Months 13–18): Market business and manage buyer negotiations

Maximise your sale success by following these proven strategies:

• Start planning 18 months early: Avoid rushed decisions that reduce sale price
• Delegate preparation tasks: Use employees and consultants to speed up documentation
• Network with other sellers: Learn from business owners who've completed successful sales
• Invest in professional preparation: Proper setup can increase sale value by 20–40%

With organised financials, you can confidently show buyers the value of your business. Cloud accounting software makes it easy to keep your books in order and generate the reports you need. Try Xero for free to see how it can simplify your financial management.

FAQs on selling a business in Australia

Here are answers to some common questions about selling a business.

Do you pay capital gains tax when selling a business in Australia?

Yes, selling a business is a capital gains tax (CGT) event. You may be able to reduce the tax you pay by applying for small business CGT concessions, like the 15-year exemption on a business asset. It's best to get advice from a tax professional.

How long does it take to sell a small business in Australia?

The time it takes can vary widely, from a few months to over a year. Factors like the industry, business size, and market conditions all play a role. Being well-prepared can help speed up the process.

What happens to employees when you sell a business?

When a business is sold, employees may be transferred to the new owner. As the seller, you are responsible for ensuring all their entitlements, such as annual and long service leave, are handled correctly according to Australian law.