Ready, Set, Sell: Preparing for a business exit

For many business owners, a sale is the culmination of years of investment, risk and effort. However, owners often wait until an offer is received before preparing for a transaction. By then, opportunities to increase value, manage risk and improve deal certainty may have been lost.

Ideally, sale preparation should begin at least 24 to 36 months before going to market. This gives owners and their advisers time to identify and address legal, financial and operational issues without the pressure of a live transaction.

Early preparation matters more than ever

Australia is approaching the largest transfer of business ownership in history. At 30 June 2026, there were approximately 2.8 million actively trading businesses. Nearly half of these are owned by people over 50 and more than 500,000 are owned by people aged 60 or older. It’s estimated that the retirement of this cohort will result in the transfer of $3.5 trillion over the next two decades. Recent research also indicates that 48% of baby boomer business owners intend to exit within one to five years, but only 24% of those have a succession plan.

As more businesses come to market, buyers will be increasingly selective. A well-prepared, “sale- ready” business will be better positioned to attract credible buyers, drive value and complete on favourable terms.

What does “sale ready” mean?

Buyers are looking for more than financial performance. They want to fully understand the operations of the business they are buying and to do this will usually conduct in depth due diligence. Being “sale ready” means being fully prepped, organised, and structured so that no ‘skeletons’ or deal breakers are uncovered during the due diligence process. In practice, ‘sale readiness’ may look slightly different depending on how the deal is structured.

Transaction structure

Deal structure is one of the first things to consider as it affects tax, risk allocation, employee arrangements, third-party consents and the scope of due diligence. Generally, an acquisition will be structured as either a share sale or an asset sale.

• Share sale: In a share sale, the buyer acquires the corporate entity, including its contracts, employees, assets, trading history and liabilities. Continuity is simpler, but the buyer inherits more risk and will generally require broader due diligence and warranty protections.
• Asset sale: In an asset sale, the buyer acquires specified assets and assumes agreed liabilities. This provides greater control over inherited risk, but may require individual contract assignments or novations, employee transfer arrangements and replacement licences or permits.

Neither structure is inherently preferable. Owners should obtain legal and tax advice before considering a sale, because the preferred structure will determine much of the required preparatory work.

Legal sale readiness checklist

Regardless of deal structure, the checklist of matters that a business owner should be thinking about in preparing for a sale is broadly consistent:

• Reduce key-person risk. One of the biggest impacts on price is key person risk. To avoid this, owners should build management capability, delegate customer relationships and document critical processes. A business that can successfully perform without its founder is both easier to sell and more valuable. 
• Complete corporate housekeeping. Buyers expect a clean company with up-to-date corporate documentation. Owners should reconcile share registers and corporate records, review governing documents and identify and address related-party arrangements, loans and guarantees.
• Prepare reliable financial and tax records. Financial record-keeping is key. Owners should maintain two to three years of consistent financial reporting and address tax disputes, Division 7A loans, losses and franking balances. Obtaining early advice on CGT, GST and duty will ensure ideal structuring of the transaction.
• Review material contracts. Nothing stalls a deal like a difficult counterparty to a key contract. To avoid pitfalls, owners should identify change-of-control, assignment, exclusivity and restraint provisions and plan for required consents and the release or replacement of personal and corporate guarantees.
• Audit workforce arrangements. Operational continuity is a top priority for buyers. To ensure a seamless transition, owners should review employee arrangements confirming employee and contractor classifications, leave liabilities, superannuation compliance, key-person retention measures and enforceable restraints.
• Confirm intellectual property ownership. Buyers want to ensure the IP they’re buying is valid. Owners should ensure contractor-developed IP has been assigned, registrations are current, and domains, business names, software licences and data practices are properly documented.
• Check licences and regulatory approvals. Particularly in a regulated industry, owners should determine whether key licences are transferable or if the buyer will need to obtain its own. It’s also prudent to consider whether foreign investment, competition or industry-specific regulatory approvals are necessary.
• Prepare the data room early. Ultimately, a smooth DD process comes down to the vendor answering buyer questions quickly, consistently, and with supporting documentation. Owners should organise documents ahead of time so that a data room is assembled and ready to go when a buyer approaches. 

Preparation, not perfection

A business does not need to be flawless before sale. However, known issues should be understood, documented and, where practical, resolved. Treating readiness as a structured project gives advisers time to strengthen the business’s legal foundations and enables owners to negotiate from a position of greater confidence.

Planning a sale or succession? 

Contact our Corporate Advisory team for a confidential sale-readiness review. We can work with you and your advisers to identify priority issues, assess transaction structures and develop a practical roadmap to increase value and support a successful exit.

Tiffany Lucas											Andrew Thompson
Partner | Corporate Advisory											Partner | Corporate Advisory
E: tlucas@ajandco.com.au  P: 03 7054 5619											E: athompson@ajandco.com.au  P: 03 7054 5620