Buying a business is one of the most significant financial decisions you’ll ever make. Whether you’re acquiring an established café, a thriving retail outlet, or a service-based enterprise, the process involves complex legal, financial, and commercial considerations. Whilst the prospect of business ownership is exciting, the path to successful acquisition is fraught with potential pitfalls that can cost you dearly without proper legal guidance.
Understanding the business purchase process and, more importantly, engaging experienced solicitors from the outset can mean the difference between a sound investment and a costly mistake.
The Business Purchase Journey in Queensland
The process of purchasing a business in Queensland typically follows several critical stages, each requiring careful navigation and expert oversight.
Initial Search and Preliminary Assessment
Your journey begins with identifying a suitable business opportunity. You’ll typically sign a confidentiality agreement to access detailed information about the business’s operations and financials. This is your first encounter with legally binding documentation, and it’s crucial to understand your obligations before signing anything.
Even at this early stage, having a solicitor review confidentiality agreements protects your interests and ensures you’re not inadvertently accepting unfavourable terms that could limit your options later.
Making an Offer
Once you’ve identified a promising opportunity, you’ll submit a written offer, usually subject to conditions such as finance approval, satisfactory due diligence, and lease assignment. A holding deposit is typically paid at this stage, often held in trust by a solicitor or broker.
Why you need a solicitor: Structuring your offer correctly is vital. Your solicitor can ensure appropriate conditions are included to protect your position, advise on reasonable timeframes for conditions, and safeguard your deposit until you’re satisfied with your investigations.
Conducting Due Diligence
Due diligence is perhaps the most critical phase of any business purchase. This comprehensive investigation involves scrutinising financial records, verifying assets and stock, reviewing employee entitlements, checking regulatory compliance, assessing customer and supplier contracts, and identifying any legal issues, debts, or encumbrances.
Why you need a solicitor: Due diligence isn’t simply about reviewing documents—it’s about understanding what they mean for your future business. Solicitors bring trained legal expertise to identify red flags that non-lawyers might miss. We can conduct proper searches for encumbrances, litigation, and regulatory breaches, interpret complex commercial leases and identify unfavourable terms, assess the adequacy of intellectual property protections, evaluate employee contracts and potential liability for entitlements, and identify environmental or compliance issues that could result in costly penalties.
Without proper legal due diligence, you might unknowingly inherit significant debts, undisclosed liabilities, or compliance issues that could jeopardise your entire investment.
Securing Finance
Most business purchases require external financing. Lenders will have specific requirements regarding security, guarantees, and documentation.
Why you need a solicitor: Your solicitor can review finance documents to ensure you understand your obligations, advise on the implications of personal guarantees and security arrangements, and ensure finance conditions in your purchase contract align with your lender’s requirements.
Negotiating and Executing the Contract of Sale
The contract of sale is the cornerstone document that governs the entire transaction. It sets out the purchase price, payment terms, what’s included in the sale, warranties and representations from the seller, restraint of trade provisions, and conditions precedent to settlement.
Why you need a solicitor: This is where legal expertise is absolutely essential. Solicitors don’t simply prepare or review contracts—we protect your interests by ensuring the contract accurately reflects what you’re purchasing and at what price, including robust warranties to protect you against undisclosed problems, incorporating appropriate restraint of trade clauses to prevent the seller from competing with you, clearly defining what assets, stock, and intellectual property are included, establishing fair mechanisms for stock valuation at settlement, and including conditions that give you an exit strategy if problems emerge.
A poorly drafted contract can leave you with no recourse if the business underperforms, assets are missing, or the seller has misrepresented the business’s financial position. The relatively modest cost of proper legal advice pales in comparison to the potential losses from an inadequate contract.
Request a pre-purchase legal review to identify risks early, contact us today.
Pre-Settlement Preparations
Between contract exchange and settlement, numerous tasks must be completed, including obtaining landlord’s consent for lease assignment, transferring or applying for licences and permits, notifying regulatory authorities, and arranging appropriate insurance coverage.
Why you need a solicitor: Your solicitor coordinates these essential steps, ensuring nothing falls through the cracks. We liaise with landlords, regulatory bodies, and other parties to ensure all necessary approvals are obtained before you’re committed to settlement. Missing a critical licence or permit could leave you unable to operate legally after purchase.
Settlement
Settlement is when ownership formally transfers. Funds are exchanged, documents are signed and registered, and you take control of the business.
Why you need a solicitor: Solicitors manage the settlement process to ensure all conditions have been satisfied before funds are released, all necessary documents are properly executed and registered, the seller has discharged any encumbrances on the assets, and you receive everything you’re entitled to under the contract.
We act as your safeguard, ensuring you don’t hand over funds until you’re legally entitled to the business and its assets.
Post-Settlement Compliance
After settlement, you’ll need to register for an ABN, register for GST if applicable, notify relevant authorities of the change of ownership, and ensure ongoing compliance with all regulatory requirements.
Why you need a solicitor: We can guide you through post-settlement obligations and ensure you meet all legal requirements for operating your new business, preventing costly compliance issues down the track.
The Hidden Risks of Going It Alone
Many prospective business buyers, particularly first-timers, underestimate the complexity of business acquisitions. They may believe that because a business broker is involved or because the seller seems trustworthy, they can manage without legal representation.
This approach is fraught with risk. Consider these common scenarios where lack of legal guidance proved costly:
Undisclosed liabilities: A buyer purchased a café without proper due diligence and later discovered significant unpaid superannuation and employee entitlements that became their responsibility.
Lease issues: A buyer completed a purchase without confirming the landlord’s consent for lease assignment, only to have the landlord refuse to transfer the lease, leaving them with a business but nowhere to operate it.
Inadequate restraint of trade: A buyer failed to include proper restraint provisions, and the seller opened a competing business next door within months, taking most of the customer base.
Asset discrepancies: A buyer who didn’t properly document included assets found that key equipment was removed before settlement with no contractual recourse.
Misleading financial information: A buyer relied on incomplete financial records and discovered after purchase that the business was significantly less profitable than represented, with no warranties in the contract to seek compensation.
Each of these situations could have been prevented with proper legal involvement from the beginning.
The Value Proposition: Why Legal Fees Are an Investment, Not an Expense
Some buyers hesitate to engage solicitors because of perceived costs. However, legal fees for business purchases should be viewed as an investment in risk mitigation, not merely an expense.
Consider the value our involvement provides:
Protection of your investment: We ensure you know exactly what you’re buying and identify problems before you’re committed. The cost of discovering a major issue after settlement far exceeds any legal fees.
Negotiating power: Experienced solicitors negotiate from a position of knowledge and can often secure better terms, potentially saving you more than our fees in price adjustments or improved contract conditions.
Peace of mind: Knowing that experienced professionals have thoroughly reviewed every aspect of your purchase allows you to focus on planning your business’s future rather than worrying about what might go wrong.
Time efficiency: We manage complex legal processes efficiently, coordinating with multiple parties and handling documentation, freeing you to focus on business planning and transition.
Avoiding costly disputes: Properly drafted contracts with clear terms significantly reduce the likelihood of post-settlement disputes, which can be extremely expensive to resolve.
Choosing the Right Legal Partner
Not all solicitors have equal experience in business purchases. When selecting legal representation, look for a firm with demonstrated expertise in commercial transactions, specific experience with Queensland business sales, a thorough and proactive approach to due diligence, and clear communication in plain English, not impenetrable legal jargon.
The solicitor-client relationship in a business purchase should be a partnership. We should understand your goals, concerns, and risk tolerance, providing advice tailored to your specific
circumstances rather than generic guidance.
Taking the First Step
If you’re considering purchasing a business in Queensland, the single most important step you can take is engaging experienced solicitors early in the process—ideally before you make an offer or sign anything.
Early engagement allows us to guide you through every stage, protect your interests from the outset, and maximise your chances of a successful acquisition. We can even assist in identifying potential issues before you invest significant time and emotion in a particular opportunity.
Purchasing a business should be an exciting venture into entrepreneurship or expansion. With proper legal guidance, you can proceed with confidence, knowing that your interests are protected and your investment is sound.
Don’t leave the success of your business purchase to chance. Contact our experienced commercial team today to discuss how we can assist with your business acquisition and ensure your journey to business ownership is as smooth and secure as possible.
Ready to buy a business in Queensland?
Contact our experienced Commercial Law team today for tailored legal advice that protects your investment from the start.
Call us on 1300 334 566 or contact us online — we assist clients across Queensland by phone, email, or video.
With offices (and real people) across Brisbane, the Gold Coast, and the Sunshine Coast, we offer genuine flexibility — we can meet in person, come to you, or handle everything remotely.
Unlike larger city firms, Bennett Carroll Solicitors provides a personal, business-to-business approach — practical legal support built on relationships, not just transactions.
Relevant Reads :
- Due Diligence When Buying a Business in Queensland
- Selling a Business in Queensland: Legal Steps for a Smooth Sale
- Demystifying Business Contracts: Essential Dos and Don’ts for Queensland Entrepreneurs
- Contract Negotiation – Tactics & Strategy – Legal advice article
- Understanding WIWO: Walk-In Walk-Out Contracts in Queensland Business Law
- When Business Partners Fall Out: Your Guide to Resolving Partnership Disputes in Queensland
- Buy an existing business- QLD Government Guide
The information provided in this article is general in nature and should not be relied upon as legal advice. Every business purchase is unique, and specific legal advice should be sought for your particular circumstances.
