How Lawyers Assist with Selling or Buying a Business
June 18, 2025
Selling or buying a business can be a complex process involving significant legal, financial, and operational considerations. Engaging a lawyer with experience in selling and buying businesses is crucial to ensure the transaction proceeds smoothly, complies with Australian law, and protects your interests—whether you are a buyer or a seller.
Role of Lawyers in Business Sales and Purchases
Lawyers play a central role in every stage of the business sale or purchase process:
- Due Diligence: Lawyers conduct thorough due diligence to uncover hidden risks, such as undisclosed debts, pending litigation, regulatory issues, or problems with contracts, leases, and intellectual property. This process helps buyers make informed decisions and gives sellers confidence that all disclosures are accurate.
- Drafting and Reviewing Agreements: Lawyers draft and review all key agreements, ensuring they are tailored to the specific transaction and comply with Australian law. This includes the main business sale agreement and any ancillary documents.
- Negotiating Terms: Lawyers negotiate terms on behalf of their clients to secure favorable outcomes, clarify obligations, and address any ambiguities or potential pitfalls in the contract.
- Transfer of Assets and Contracts: They manage the legal transfer of assets, leases, permits, licenses, and ongoing contracts, making sure all necessary approvals and assignments are obtained.
- Employment Law Compliance: Lawyers advise on the treatment of existing employees, transfer of entitlements, and compliance with workplace laws, ensuring a seamless transition for staff.
- Settlement and Completion: They oversee the settlement process, confirming that all conditions are satisfied, payments are made, and legal ownership is transferred without outstanding liabilities.
- Post-Sale Support: Lawyers can provide ongoing advice on post-sale obligations, such as restraint of trade, handover arrangements, and dispute resolution.
Key Agreements and Documents Lawyers Draft
The main legal document in a business sale is the Business Sale Agreement. Lawyers also prepare or review several related documents to safeguard their client’s interests:
- Heads of Agreement or Term Sheet: A preliminary, usually non-binding document setting out the key terms agreed by the parties before the full contract is drafted.
- Business Sale Agreement: The comprehensive contract detailing all terms and conditions of the sale, including what is being sold (assets, shares, goodwill), price, payment terms, and settlement arrangements.
- Transfer Deeds: For transferring ownership of specific assets, intellectual property, or leases.
- Employment Agreements or Transfer Notices: To address the transfer or termination of employees and the treatment of their entitlements.
- Non-Disclosure Agreements (NDAs): To protect confidential information during negotiations and after the sale.
- Completion Checklist: A practical tool to ensure all steps are completed before settlement.
Why Legal Advice Is Essential
Attempting to buy or sell a business without legal guidance exposes parties to significant risks, including:
- Unintended assumption of liabilities.
- Disputes over what is included in the sale.
- Problems with the transfer of leases, contracts, or licenses.
- Employment law breaches.
- Tax and regulatory non-compliance.
Lawyers help ensure all legal requirements are met, documents are properly drafted, and your interests are protected throughout the transaction.
Conclusion
Once the value of a business reaches a certain level, lawyers become indispensable in business sales and purchases. They provide expert guidance, draft and negotiate robust agreements, and manage the legal complexities of the transaction. Engaging a lawyer early in the process is the best way to help ensure a successful, compliant, and dispute-free outcome.
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Starting a new company is an exciting venture, but establishing a solid legal foundation from the outset is critical for long-term success. One of the most overlooked yet essential documents for any business with more than one shareholder is a Shareholders Agreement. Engaging a commercial lawyer to draft and assist you to validly execute this agreement at the commencement of your business can protect your interests, prevent disputes, and set your company up for lasting stability. What is a Shareholders Agreement? A Shareholders Agreement is a private, legally binding contract between a company’s shareholders (and often the company itself). It sets out how the company is managed, how key decisions are made, how exits or disputes are handled, and what happens if a shareholder wishes to leave or transfer their shares. Key Reasons to Get a Shareholders Agreement Drafted by a Commercial Lawyer 1. Clarity and Certainty on Roles and Rights Clearly outlines each shareholder’s rights, responsibilities, and decision-making powers from the outset. Removes ambiguity around management structure, voting rights, and director appointments, helping to avoid misunderstandings and conflicting expectations. 2. Preventing Costly Disputes Provides agreed procedures for resolving conflicts, often through internal mechanisms and alternative dispute resolution before court action. Helps ensure minor disagreements do not escalate into expensive and disruptive legal battles. 3. Protecting the Interests of All Shareholders Safeguards the investments and interests of both majority and minority shareholders, preventing unfair treatment and providing mechanisms for redress. Outlines how decisions are made, including which require unanimous or special majority consent, benefiting both active and passive shareholders. 4. Smooth Share Transfers and Exit Strategies Details rules for issuing new shares or transferring existing ones, including pre-emptive and “drag-along” or “tag-along” rights. Ensures continuity and stability if a shareholder wishes to leave, retires, or passes away, preventing unwanted third parties from joining the company. 5. Business Growth and Investment Readiness Demonstrates business maturity and governance, giving confidence to future investors, banks, and other stakeholders. Investors often insist on a robust agreement as a prerequisite for funding rounds or other strategic partnerships. 6. Protecting Confidentiality and Company Value Includes clauses safeguarding against misuse or disclosure of confidential company information. Prevents former shareholders from directly competing with the business or poaching key staff and clients. Why Get Help from a Commercial Lawyer? While some templates are available online, they rarely address the unique dynamics and needs of each startup. A commercial lawyer will: Tailor the agreement to your business’s structure, goals, and risk profile. Ensure compliance with the Corporations Act 2001 (Cth) and other relevant Australian laws. Minimise the risk of unenforceable or contradictory clauses and keep your agreement up-to-date as your business evolves. The Importance of Executing the Agreement at Commencement Executing a shareholders agreement at the start of your business journey: Ensures all founders and shareholders are aligned before capital, effort, and goodwill have been significantly invested. Avoids “moving the goalposts” after the fact, when negotiations may be more contentious or when disputes have already emerged. Ensures the terms are legally binding and enforceable, giving all parties true peace of mind. Conclusion A shareholders agreement is not a statutory requirement—but for any new Australian company with more than one shareholder, it is a critical tool for risk management, governance, and business success. Engaging a commercial lawyer to draft, tailor, and help you execute this document from day one offers real protection and clarity for your business and its investors. If you’re setting up a company, connect with Crabtree Legal to ensure you start up with the right legal structure in place. We can help tailor a shareholders agreement to fit your business, safeguard your rights, and support your future growth. This article is provided for general information only and does not constitute legal advice. For advice tailored to your business, please contact Crabtree Legal.
What Are Trusts? A Trust is a legal arrangement where a person or entity ( the Trustee ) holds and manages assets for the benefit of others (the Beneficiaries ). The Trustee is responsible for administering the Trust in accordance with its terms and in the best interests of the Beneficiaries. Trusts are commonly used for asset protection, estate planning, and business structuring in Australia. Key Parties in a Trust Settlor : the person who creates the Trust and contributes the initial assets. Trustee : the individual or company responsible for managing the Trust assets. Beneficiaries : the people or entities who benefit from the Trust. Appointor : the person who has the power to appoint or remove Trustees. How Can Trusts Benefit Individuals and Business Owners? Trusts offer a range of advantages for both personal and business purposes: 1. Asset Protection Trusts can help shield assets from creditors, lawsuits, or family disputes, as the assets are legally owned by the Trustee, not the individual. 2. Estate Planning and Succession Trusts allow for the smooth transfer of wealth to future generations, helping to provide for minor or vulnerable Beneficiaries. 3. Tax Planning Trusts can offer tax flexibility. Income generated by Trust assets can be distributed among Beneficiaries, potentially reducing the overall tax liability. 4. Business Structuring Trusts are often used by business owners to separate business assets from personal assets, manage risk, and facilitate succession planning. 5. Privacy Trust arrangements are generally private, unlike Wills which become public during probate. How Are Trusts Created in Australia? Establishing a Trust in Australia involves several key steps: 1. Decide on the Type of Trust Common types include: Discretionary Trust : Trustee decides how income/capital is distributed among Beneficiaries. Common for family Trusts. Unit Trust : Beneficiaries hold fixed units, similar to shareholders in a company. Often used for business or investment purposes. Testamentary Trust : created by a Will, comes into effect upon the Will-maker’s death. 2. Prepare a Trust Deed A Trust deed is a legal document that sets out the terms and conditions of the Trust, including the powers of the Trustee and the rights of the Beneficiaries. 3. Settle the Trust The Settlor provides the initial asset (often a nominal sum) to establish the Trust. 4. Appoint Trustees and Beneficiaries The Trust deed will name the Trustees and Beneficiaries. The Trustee must accept their role and responsibilities. 5. Stamp Duty and Registration In Western Australia, unlike some other Australian states, stamp duty is not payable on the mere execution of a Trust deed and it does not need to be stamped. Registration with the Australian Taxation Office (ATO) will be necessary if the Trust will have a Tax File Number or Australian Business Number. 6. Ongoing Compliance Trustees must comply with the terms of the Trust deed and relevant laws, including annual reporting and tax obligations. If you are considering establishing a Trust, Crabtree Legal can provide tailored advice to ensure your Trust is structured to meet your personal or business needs.