Before accepting an offer to buy your business, understand what is being sold, how the price will be calculated and which obligations will stay with you. A short offer can settle important points before the full sale agreement is drafted.
You do not need to resolve every detail in the first conversation. You do need to know which decisions are being made and what you are being asked to commit to.
Start with the offer.
Ask your lawyer to review proposed heads of agreement, exclusivity, confidentiality and any deposit arrangements before you sign them. A document described as “non-binding” may still contain binding obligations.
Identify whether this is a share sale or an asset sale, along with the parties, conditions and timetable. Involve your accountant early enough to assess the tax consequences of the proposed structure.
Look beyond the headline price.
Find out whether the offer is based on enterprise value, equity value or another basis. Ask how cash, debt, stock and working capital will be treated, and whether any payment is deferred or conditional.
Check any earnout against what you can influence after completion. The offer should be understood as a set of linked commercial terms, rather than a single number.
Prepare what the buyer will review.
Organise contracts, leases, employment records, intellectual property and company documents. Identify missing records or consents and explain discrepancies accurately.
Agree how information will be shared before opening the data room. Confidentiality arrangements, access controls and the treatment of personal information need attention even where a sale is still uncertain.
Understand the obligations you keep.
Read warranties, indemnities, liability limits, restraints and any post-sale assistance obligations together. Ask what could lead to a claim, how long the exposure lasts and how the agreement deals with information disclosed to the buyer.
If you will keep working in or supporting the business, review that arrangement alongside the sale. It may affect what the transition requires of you.
Plan completion before the deadline.
Make a list of approvals, landlord or counterparty consents, releases, payments and documents needed for handover. Assign responsibility for each item. Check the consequences if a condition is not satisfied by the longstop date.
The Australian Government’s business-sale guide gives a broader overview of the process. Our preparation checklist focuses on the work you can organise before a buyer arrives.
If you already have an offer, tell us about the proposed sale. A short outline of the structure, stage and next deadline is enough to start the discussion.