Assessing a business before you make an offer
Most businesses for sale come with an information memorandum that reads like a brochure. Our first job is to read past it. We look at the quality of revenue, the real profit once the owner's role is priced at market, the working capital the business needs and the reasons the seller is really selling.
We also look at fit. A great business can be a poor purchase if it needs skills you do not have, cash you cannot fund or a licence you cannot hold. A short assessment at this stage saves a lot of money on deals that should not proceed.
This is also the moment to sense-check the price against the market. Sellers and brokers anchor high. An indicative valuation from us, based on normalised earnings and the risks we can see, tells you whether the asking price is in the ballpark or whether the conversation should start somewhere else.
- Review of the information memorandum and financials
- Normalised earnings and indicative value range
- Cash flow and working capital needs
- Key risks: customers, staff, suppliers, leases, licences
- Go or no-go recommendation before you spend on due diligence
Due diligence on the business purchase
Once an offer is accepted in principle, due diligence tests everything the seller has told you. We reconcile reported profit to bank statements and BAS, check payroll and superannuation compliance, review contracts and leases and identify liabilities that would come with the business.
The findings feed straight into the deal: a price adjustment, a retention amount, specific warranties or a decision to buy assets rather than shares. Our due diligence page explains the process in detail.
Structuring the purchase
Which entity buys the business is one of the most important decisions in the whole process, and one of the easiest to get wrong under time pressure. A company, a trust, a new entity under a holding company or your existing business each give a different result for tax, asset protection, future sale and funding.
We also advise on asset versus share purchase, how the price is allocated, GST treatment including whether the sale qualifies as a going concern, Queensland transfer duty and the mechanics of earn-outs and vendor finance. Everything is modelled under the ATO's current rules so you know the outcome before you sign.
Timing around the financial year, the treatment of stock and work in progress at settlement and the employee entitlements you take on also deserve attention. Small line items in the contract can translate into large cash differences on settlement day.
Funding a business acquisition
Lenders want a credible story: a business that can service the debt, a buyer with relevant experience and a forecast that holds up. We prepare the cash flow forecast, the funding model and the supporting pack that banks and brokers expect to see.
We also stress-test the deal. What if revenue drops after the owner leaves? What if a major customer goes? If the business only works on the seller's best year, the price or the structure needs to change.
- Three-way forecast for the lender and for you
- Debt serviceability and sensitivity scenarios
- Mix of bank debt, equity and vendor finance
- Working capital facility sized to the business cycle
Your first year as the new owner
Settlement is the start, not the finish. The first year is when the transition risks show up: customers testing the new owner, staff deciding whether to stay, systems that lived in the seller's head.
We set the business up in Xero with clean opening balances, build a monthly reporting rhythm, track the forecast against actuals and keep an eye on the handover terms, earn-out calculations and any retention conditions. If you want more support, our virtual CFO service steps in as a part-time finance lead.
Clients in construction, franchising, allied health, transport and NDIS services have been through this with us. Each industry has its own quirks, from licensing to award compliance, and the first year is easier when your accountant already knows them.
Questions we get asked
What should I check before buying a business?
Start with normalised profit, revenue quality, customer concentration, working capital, staff and payroll compliance, leases and contracts, tax lodgement history and why the owner is selling. Then check fit: can you run it, fund it and hold any licences it needs. A short assessment answers most of these before you spend on full due diligence.
Should I buy the business assets or the company shares?
Buyers often prefer an asset purchase because it leaves the seller's tax and legal history behind and lets you pick which assets and contracts you take. A share purchase can be simpler where contracts and licences are hard to transfer. Each has different tax, duty and risk outcomes, so we model both.
Which entity should I use to buy a business?
It depends on your existing structure, your other assets, how the purchase is funded and whether you plan to sell again. A new entity under a holding company is common because it keeps the new business separate from everything else. We review your situation before recommending a structure.
How do I finance buying a business?
Common options include bank lending secured against the business and sometimes property, vendor finance where the seller is paid over time, equity from investors or partners and your own funds. Lenders expect a forecast and a serviceability case. We prepare these and help you compare the real cost of each option.
Is GST payable when buying a business?
Often not, if the sale meets the ATO's going concern requirements and the contract is drafted accordingly. If it does not, GST can apply to the purchase price, which affects cash flow even where it is later claimed back. The treatment needs to be settled before contracts are signed.
