How to sell a business in Australia

Published Friday 15 May 2026

Table of contents

• Is selling your business the right decision?
• Should you hire professionals to sell your business?
• How to sell a business
• Confidentiality and NDAs
• Common mistakes to avoid when selling your business
• Managing employees during a business sale
• Tax implications when selling your business
• Changing ownership
• Simplify your business finances with Xero
• FAQs on selling a business in Australia

Key takeaways

• Start planning your business sale 12–18 months early; industry estimates suggest proper preparation can increase your sale price by 20–30% and help you avoid rushed decisions that 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 two to three 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 deter potential buyers.
• Organise all documentation before due diligence begins, including complete financial records, legal agreements, and a written business plan, to keep this four to six week process efficient and show buyers you're well prepared.

Selling a business in Australia typically takes 6–12 months from listing to settlement. Whether you're retiring, pursuing a new venture, or simply ready to move on, understanding each stage of the process helps you maximise your sale price and avoid costly mistakes.

Is selling your business the right decision?

Only you can answer this, but most owners sell for one of a handful of common reasons: retirement, burnout, a desire to pursue a new opportunity, or favourable market timing. Getting clear on your motivation early helps you stay focused throughout the process.

Deciding to sell your business is a significant step. Your reasons might be personal, like wanting a better work-life balance, or financial, like cashing in on years of hard work. Whatever the motivation, defining your goals upfront sets you up for a smoother sale.

Take time to think about what you want to achieve from the sale. Consider the minimum price you'd accept, how quickly you need to settle, and whether you'd prefer a buyer who'll continue the business as it is. A clear exit strategy keeps you focused and helps you measure whether an offer truly meets your needs.

Should you hire professionals to sell your business?

Hiring professionals can significantly reduce risk and help you achieve a higher sale price. A business broker, accountant, and lawyer each bring expertise that's difficult to replicate on your own.

Selling a business involves legal paperwork, financial analysis, and complex negotiations. While you can manage the process yourself, getting help from professionals often makes the process faster and less stressful. They can help you prepare your books, find qualified buyers, and navigate the legal complexities.

Consider working with:

• a business broker to help you find potential buyers and negotiate the sale; brokers typically charge a commission of 5–10% of the sale price, or a flat fee for smaller businesses
• 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

The cost of professional help is usually recovered through a higher sale price and fewer post-sale disputes.

How to sell a business

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

1. Make a plan to sell your business

Starting early is the single most effective way to increase your sale price. Industry estimates suggest that proper preparation can lift your business value by 20–30%.

Business sale planning means preparing your business for sale well before you need to sell. Starting 12–18 months ahead provides three key advantages:

• Maximise sale price. Proper preparation can significantly increase your business value.
• 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. Prepare your documentation

Well-organised documentation can speed up your sale by two to three months and increase buyer confidence. Focus on three critical areas.

Financial statements

Buyers typically 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

Strong cash flow management throughout the lead-up to a sale gives buyers confidence that the business generates reliable income.

Supplier agreements and customer contracts

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

If a single client represents a large share of your revenue, a prospective buyer will want to see they're locked in. Similarly, if you have a great deal on supplies, get it in writing before you go to market.

Internal processes

Formalise your ways of working. Write down how the business operates, who's responsible for what, the order things get done in, and what systems you use. Think of this as a manual for running the business that helps 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, ask them to write the parts relevant to their roles.

3. Get your business valued

A professional business valuation determines your company's market worth using proven financial methods. This helps you set a competitive asking price and avoid overpricing, which can deter buyers.

Professional valuers often adhere to International Valuation Standards (IVS) to ensure consistency. Choose your valuation professional based on your sale type:

• Accountant valuation: best for known buyers like employees or family members
• Business broker: useful when finding external buyers, as they also provide marketing services
• Professional valuer: most accurate for complex businesses or legal disputes

Three methods of business valuation

Professional valuers select the most appropriate method based on your industry and business type:

• Asset-based methods: calculate all assets minus liabilities, often used for liquidation scenarios
• Earnings-based methods: value the business by its profit and cash generation track record, often using EBITDA multiples
• 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. Find a buyer

Finding the right buyer is about more than price. The ideal buyer offers fair market value and supports a smooth business transition.

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 help find buyers. They generally have plenty of entrepreneurs in their network. Bankers, lawyers, and other business consultants may have suggestions too.

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

5. Manage the offer

Once you've met genuine prospects and given them a clear overview of the business, you'll start fielding offers. If several prospects are interested, try to give everyone a fair timeline to submit.

When selling a business, the offers you receive 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 confirm 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 payment contingent on the business performing well after handover, to protect against revenue dropping once the owner has left.

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

6. Complete 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

The buyer's legal team will check for any pending or ongoing legal action against the business. They'll also review copyright, trademarks, patents, and 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 review the business credit rating and possibly the tax history.

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, 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.

Provide a complete set of well-maintained financials, a file of agreements, and a written business plan. Running your books on accounting software also allows you (or the buyer) to generate more reports as needed.

7. Prepare the sale contract

Once due diligence is complete, the next step is formalising the agreement in a legally binding sale contract. This is typically handled by your lawyer and the buyer's lawyer working together.

Before the formal contract, both parties usually sign a heads of agreement (also called a letter of intent). This non-binding document outlines the key commercial terms you've agreed on, including price, payment structure, and settlement timeline. It gives both sides confidence to proceed with the final contract.

The formal sale contract will typically cover:

• Purchase price and payment terms: the total amount, deposit, and whether payment is a lump sum or in instalments
• Restraint of trade clause: a restriction preventing you from starting or working in a competing business for a set period and within a defined area
• Warranties and indemnities: your guarantees about the accuracy of information provided, and protections for the buyer if something turns out to be different from what was disclosed
• Settlement process: the agreed date when ownership officially transfers, final payments are made, and the buyer takes control of operations

Have your lawyer review every clause before you sign. Contracts for business sales are complex, and small oversights can lead to disputes or unexpected liabilities after settlement.

Confidentiality and NDAs

Protecting sensitive business information during a sale is essential. A confidentiality agreement, commonly known as a non-disclosure agreement (NDA), prevents potential buyers from sharing or misusing the details they learn about your business.

You should have every serious buyer sign an NDA before you share financial statements, customer lists, supplier contracts, or operational details. Without one, a competitor posing as a buyer could gain access to information that damages your business.

A standard NDA for a business sale typically includes:

• a definition of what counts as confidential information
• obligations on how the buyer can use and store that information
• the duration of the confidentiality obligation (often two to five years)
• consequences for breaching the agreement

Once a buyer has signed the NDA, you can share an information memorandum. This is a detailed document that presents your business to prospective buyers, covering financial performance, operations, market position, and growth opportunities. It gives buyers enough detail to make an informed offer while the NDA protects you.

Common mistakes to avoid when selling your business

Selling a business takes planning, but understanding the process helps you avoid common pitfalls. 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

Under Australian law, you have specific obligations to your employees when ownership changes. Getting this right protects both your staff and the value of the sale.

Your employees are a valuable part of your business, and their future is an important consideration during a sale. You'll need to make sure all employee entitlements, such as annual leave, long service leave, and superannuation, are correctly calculated and either paid out or transferred to the new owner.

The Fair Work Act 2009 includes transfer of business provisions that may apply when a new owner takes over. If the sale qualifies as a transfer of business, employees who move to the new owner generally carry over their existing terms and conditions of employment, including accrued entitlements.

If the new owner doesn't offer employment to all staff, you may need to manage redundancies. This includes providing notice periods and redundancy pay in line with the National Employment Standards. It's worth getting legal advice early to understand your obligations.

Communication timing also matters. Telling your team too early can create uncertainty and affect morale, while telling them too late can damage trust. Many business owners wait until the sale is confirmed before making a formal announcement, while keeping key managers informed earlier in the process.

Tax implications when selling your business

The profit you make from selling your business is generally treated as a capital gain, which means you'll need to pay capital gains tax (CGT). The amount of tax depends on your business structure and how long you've owned it.

If your business has an aggregated turnover under $2 million, or net assets under $6 million, you may qualify for the small business CGT concessions. There are four concessions available:

• 15-year exemption. If you've owned the business for at least 15 years and you're 55 or older (or permanently incapacitated), the entire capital gain may be exempt.
• 50% active asset reduction. You can reduce the capital gain on an active business asset by 50%, on top of the general 50% CGT discount for assets held longer than 12 months.
• Retirement exemption. You can choose to exempt up to $500,000 of capital gains over your lifetime, provided the funds go towards retirement (into superannuation if you're under 55).
• Rollover. You can defer the capital gain by rolling it into a replacement business asset or into superannuation, provided you meet the time requirements.

Beyond CGT, consider these additional tax implications:

• GST going-concern exemption. If you sell your business as a going concern (meaning it will continue operating), the sale may be GST-free. Both you and the buyer must be registered for GST, the sale must include everything needed to continue the business, and you need a written agreement stating the supply is of a going concern.
• Stamp duty. Depending on the state or territory, stamp duty may apply to the transfer of certain business assets, particularly real property and motor vehicles. Rates and rules vary by jurisdiction, so check with your state revenue office.

It's a good idea to speak with an accountant or tax advisor well before the sale to understand your obligations and explore any potential savings.

Changing ownership

After the sale closes, you'll need to complete several legal and tax obligations within specified timeframes. Missing these deadlines can result in penalties.

The key steps include:

• File final tax returns. Submit business tax returns for the sale period.
• Close GST accounts. Cancel your 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 process the cancellation within approximately 28 days.

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 you keep control of the taxes you need to pay.

Simplify your business finances with Xero

Selling a business is smoother when your financial records are accurate, up to date, and easy to share with buyers. Xero's cloud accounting software helps you keep your books organised, generate the reports buyers need, and collaborate with your accountant in real time.

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FAQs on selling a business in Australia

Here are answers to some frequently asked questions about selling a business in Australia.

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, such as the 15-year exemption on a business asset. Speak with a tax professional to understand which concessions apply to your situation.

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

Most small business sales take 6–12 months from listing to settlement. Factors like your industry, business size, and current market conditions all play a role. Being well prepared with clean financials and organised documentation can help speed up the process.

What happens to employees when you sell a business?

Employees may transfer to the new owner under the Fair Work Act's transfer of business provisions, which can preserve their existing terms and entitlements. As the seller, you're responsible for ensuring all entitlements such as annual and long service leave are correctly calculated and handled according to Australian law.

How much does it cost to sell a business in Australia?

Costs vary depending on the size and complexity of the sale. You can expect to pay broker commissions of 5–10% of the sale price, legal fees of $5,000–$15,000 or more, and accounting fees for tax advice and financial preparation. Marketing costs to advertise the business may also apply.

Can you sell a business without a broker?

Yes, you can sell a business without a broker, especially if you already have a buyer in mind, such as a family member, employee, or business partner. Selling privately saves on broker commissions but means you'll handle marketing, buyer screening, and negotiations yourself. A lawyer and accountant are still recommended regardless.

What is a going concern for GST purposes?

A going concern means the business will continue operating after the sale. If both the buyer and seller are registered for GST and agree in writing that the sale is of a going concern, the transaction is GST-free. The sale must include everything needed to continue the business without interruption.