How to Buy a Business in Australia

Buying an existing business is one of the fastest ways to get into business ownership. You’re acquiring customers, cash flow, staff, and systems on day one — rather than spending years building them from scratch.

But it’s also one of the easiest ways to overpay for something that looks better than it is.

The information memorandum is written by the seller. The broker works for the seller. The financials have been prepared to show the business in the best possible light. Your job — and your advisor’s job — is to find out what’s actually there before you commit. Our Buying a Business service page covers exactly how we work with buyers through that process.

This guide covers every stage of the acquisition: how to assess the opportunity, what due diligence really involves, how to value what you’re buying, how to structure the deal, and what happens after settlement.

Why Buy an Existing Business?

Starting from scratch has appeal. You build exactly what you want, with no legacy problems. But it comes with real risk: no guaranteed revenue, no established customer base, no proof the model works.

Buying an existing business trades some of that upside for a lower-risk entry. The revenue is real. The customers exist. The team is in place. You’re buying a proven model and improving it, rather than betting everything on whether a new one will work.

The risk in buying is different — it’s the risk of paying too much, inheriting problems you didn’t know about, or buying goodwill that walks out the door with the previous owner. If you’re also on the other side of the table in future, our guide on how to sell a business is worth reading for context on how sellers prepare.

Defining What You’re Actually Looking For

Before you approach a broker or start evaluating opportunities, get clear on what you’re buying and why. The most common mistakes buyers make start here — they fall in love with a business that doesn’t fit their skills, their capital, or their goals.

Be honest with yourself about:

• Industry — where do you have relevant experience or knowledge?
• Size — what can you realistically finance and manage?
• Your role — are you buying a job, or buying an investment?
• Growth intention — are you looking to run it as-is, or grow it?
• Risk tolerance — turnaround opportunities vs stable, lower-risk businesses

A clear brief makes evaluation faster and reduces the chance of wasting months on the wrong opportunity.

The biggest risk for a buyer is overpaying for goodwill that walks out the door with the previous owner. Good due diligence separates the real business from the story being told about it.

Building Your Advisory Team

You shouldn’t navigate a business acquisition alone. The seller has a team working for them. You need one working for you.

Accountant

Your most important advisor. Their job is financial due diligence — independently reviewing the books, normalising earnings, identifying risks, and telling you what the business is actually worth. Critically, your accountant works for you, not the seller. That independence is the whole point.

Lawyer

Reviews and negotiates the sale agreement, advises on the Heads of Agreement, identifies legal risks (leases, contracts, IP ownership, employment obligations), and manages the legal settlement process.

Finance broker

If you’re financing part of the acquisition, a finance broker helps structure the lending and identify the right product. Banks assess business acquisition loans differently to standard lending — a specialist broker makes the process faster and the outcome better.

Business advisor

Beyond the transaction itself, a good business advisory relationship helps you think through whether the acquisition fits your broader business strategy — not just whether the numbers stack up in isolation.

Business broker (the seller’s, not yours)

The broker managing the sale works for the seller. They’re skilled at presenting the business in the best light and managing the process to the seller’s advantage. That’s fine — just don’t mistake their guidance for independent advice.

Finding the Right Opportunity

Once you know what you’re looking for, there are several ways to find businesses for sale:

Business brokers

Brokers like LINK Business and Benchmark Business Sales list businesses across all sectors and price ranges. Registering your buyer profile with several brokers gives you early visibility of new listings. The best deals often get placed before they’re publicly advertised — relationships matter here.

Online platforms

Seek Business, Business Sale Australia, and Bsale list businesses publicly. These are useful for broader market scanning, particularly in the sub-$1 million range. Treat them as a starting point, not a final word.

Direct approach

If you have a specific business or sector in mind, a direct approach to the owner can work well. Many business owners are open to a conversation about selling even if they haven’t formally listed. This approach can uncover opportunities that never hit the open market.

Industry networks

Accountants, lawyers, and industry contacts often know about businesses changing hands before they’re publicly listed. Being known as an active buyer in your target sector pays dividends over time.

Evaluating the Information Memorandum

The information memorandum (IM) is the seller’s pitch document. It’s designed to generate interest and justify the price. Read it critically.

The questions to ask as you go through it:

• Are the revenue figures consistent with the tax returns and BAS records?
• How are earnings presented — and what’s been added back or excluded?
• What’s the client concentration? Is revenue spread or concentrated in a few accounts?
• How dependent is the business on the current owner?
• What does the growth story rely on — and is it realistic?
• Are there obvious risks that aren’t mentioned?

The IM is not the due diligence. It’s the starting point for knowing what questions to ask.

Financial Due Diligence — The Most Important Step

Due diligence is where deals are won or lost. It’s your opportunity to verify everything in the IM — and to find what wasn’t in it. Our financial due diligence service is specifically built for this: an independent review of the books, conducted from your perspective as the buyer.

Download our free Due Diligence Checklist for the full list of what to cover.

What we look at

• Three years of financial statements — P&L, balance sheet, tax returns
• BAS records — cross-checked against reported revenue
• Payroll records — employee entitlements, superannuation obligations
• Debtors and creditors — quality of receivables, any old or doubtful debt
• Key contracts — client agreements, supplier terms, lease obligations
• Related-party transactions — expenses or income that won’t exist post-settlement
• Any pending legal matters, ATO disputes, or undisclosed liabilities

Normalisation — what the business actually earns

Raw financial statements almost never show the true earnings of an owner-operated business. Owner wages below market rate inflate EBITDA. Personal expenses run through the business inflate costs. One-off items distort the trend.

Normalisation adjusts the earnings to reflect what the business would generate under your ownership. This is the number that should drive valuation and your offer price.

Common issues we find

• Revenue concentration — one or two clients representing 30%+ of income
• Key person dependence — revenue tied to the owner’s relationships, not the business systems
• Normalisation gaps — owner wages well below market rate artificially inflating EBITDA
• GST and superannuation arrears — liabilities not disclosed upfront
• Debtors in poor shape — old debt propping up the accounts receivable balance
• Related-party transactions — income or expenses that won’t continue post-sale

None of these are necessarily deal-breakers. But each one affects valuation, and you need to know about them before you commit.

Due diligence is the best investment you’ll make on any acquisition. Far cheaper than discovering problems after settlement.

Valuation — What Is the Business Actually Worth to You?

The asking price is what the seller wants. The value is what the business is worth to you, as the buyer, under your ownership. For a full breakdown of valuation methods, see our Business Valuation guide.

EBITDA multiple — the standard approach

Most SME transactions use a multiple of normalised EBITDA. The multiple reflects the risk and quality of the business. Australian SME multiples typically range from 2x to 6x EBITDA depending on sector, size, and risk profile.

Asset-based valuation

For asset-heavy businesses — manufacturing, logistics, equipment-intensive trades — the balance sheet may be as important as the earnings.

What drives value (and discount)

Two businesses with identical EBITDA can have very different valuations. Buyers pay more for:

• Recurring or contracted revenue — predictable income reduces risk
• Diversified client base — no single client over 15–20% of revenue
• Systems and documented processes — the business runs without the owner
• Growth trend — demonstrable upward trajectory in revenue and earnings
• Strong team — key staff who will stay post-acquisition

Concentration risk, key person dependence, and declining revenue all compress the multiple. Your valuation should explicitly account for these factors.

Deal Structure — Asset Sale or Share Sale?

How you buy the business has significant tax and liability implications. The right structure is a decision to make with your accountant and lawyer before you sign anything — and it feeds directly into your asset protection strategy going forward.

Asset purchase

You buy specific assets of the business — goodwill, equipment, client contracts, IP — rather than the legal entity. The benefit: you get a clean slate. You’re not inheriting the company’s history, its potential liabilities, or its ATO obligations. Asset purchases also give you a higher cost base for future tax purposes.

Share purchase

You buy the shares in the company and take on the entity as-is — its history, liabilities, and tax position. This is simpler in some ways (contracts and licences transfer automatically) but riskier in others. Share purchases require more thorough legal due diligence.

Which entity should you use to buy?

The structure you use to own the business — company, trust, or individual — affects your tax position, asset protection, and flexibility going forward. This is core business tax planning territory — and this decision should be made before settlement, not after.

Other structural considerations:

• Stamp duty — varies by state and transaction type; asset purchases may attract duty on certain asset classes
• GST on the sale of a going concern — the sale may be GST-free if the right conditions are met; structuring this correctly can save a significant amount

Financing the Acquisition

Most acquisitions involve some level of external finance. Understanding your funding structure before you make an offer puts you in a stronger negotiating position.

Bank finance

Banks will lend against the business’s earnings and asset base, typically requiring a deposit of 30–50% for goodwill-heavy businesses. The serviceability assessment is based on the business’s cash flow — which is exactly why normalised EBITDA matters so much. It’s important to explore these conversations with a good finance broker before committing to anything!

Vendor finance

Some sellers will accept a portion of the purchase price over time, paid from future business earnings. This can bridge a funding gap and is also a useful signal — a seller confident in the business’s future is more likely to accept vendor finance terms.

Earn-out arrangements

An earn-out ties part of the purchase price to post-acquisition performance. This reduces upfront risk for the buyer while potentially increasing total proceeds for the seller. Earn-outs require careful structuring — the performance metrics, measurement period, and payment mechanics all need to be clearly defined.

Heads of Agreement and the Sale Process

Once preliminary due diligence is complete and a price is agreed in principle, commercial terms are recorded in a Heads of Agreement before the formal sale contract is drafted. Key terms to nail:

• Purchase price — and whether it’s subject to adjustment (working capital, stock, WIP)
• Structure — asset sale or share sale
• Conditions precedent — finance approval, landlord consent, key staff retention
• Due diligence period — timeline and access requirements
• Restraint of trade — what the seller can and can’t do post-settlement
• Transition arrangements — handover period, training, introduction to key clients

Don’t sign a Heads of Agreement until your accountant and lawyer have reviewed it. Once you’ve committed to a price in writing, your negotiating position weakens significantly.

Post-Acquisition: The First 90 Days

Settlement day is the beginning, not the end. The first 90 days set the trajectory for everything that follows.

Financial integration

Set up your own financial reporting from day one. Solid bookkeeping from the outset means you’re never flying blind. Understanding the working capital cycle — when money comes in, when it goes out, and what the seasonal patterns look like — is essential in the first few months. Good cash flow management from day one sets the business up properly under your ownership.

Key relationships

Identify the clients, suppliers, and staff that are critical to the business. Make personal contact early. Introduce yourself. Don’t assume relationships will transfer automatically — they need to be actively managed through the transition.

Quick wins vs long-term changes

Resist the urge to change everything immediately. Understand what’s actually driving the business before you start modifying it. There’s usually a short list of genuine quick wins — pricing adjustments, cost inefficiencies, underutilised revenue opportunities. Prioritise those first.

Compliance and obligations

Make sure BAS lodgements, payroll obligations, and superannuation are set up correctly under your ownership from day one. ATO obligations don’t pause for a business transition.

The Acquisition Process — End to End

1. Define your brief — industry, size, price range, your role in the business
2. Build your advisory team — accountant, lawyer, finance broker
3. Find and shortlist opportunities — brokers, platforms, direct approach
4. Evaluate the IM — identify key questions, red flags, what needs verification
5. Preliminary due diligence — quick financial assessment before making an offer
6. Make an offer / Heads of Agreement — commercial terms agreed in principle
7. Full due diligence — independent financial review, legal review, valuation assessment
8. Negotiate — use due diligence findings to adjust price or terms if warranted
9. Structure the transaction — entity, asset vs share, stamp duty, GST
10. Finance approval — confirm funding before settlement
11. Settlement — review completion accounts and adjustments
12. Post-acquisition setup — financial reporting, key relationships, first 90-day priorities

Common Questions About Buying a Business

Why do I need my own accountant? The seller has one.

The seller’s accountant prepared the financials and is protecting the seller’s interests. You need an independent advisor looking out for you — not the other side of the transaction. Our financial due diligence service is specifically built for buyers in exactly this position.

When should I bring in an accountant?

Before you make a formal offer. Ideally, before you sign a Heads of Agreement. The earlier your accountant is involved, the more leverage you have. Even a preliminary review of the IM before you offer can identify issues worth negotiating on.

What does due diligence cost?

It depends on the size and complexity of the business. creditte works on fixed fees agreed upfront. On any meaningful acquisition, due diligence is the best money you’ll spend — far cheaper than discovering problems after settlement.

What if due diligence turns up problems?

It depends on what they are. Minor issues are common and often priced in. Material issues — undisclosed liabilities, revenue that won’t survive the transition, significant normalisation gaps — are grounds to renegotiate or walk away. The point is to make that decision with full information, before you’re committed.

Do you work with buyers outside Queensland?

Yes. We work with buyers across Australia. All advisory is conducted remotely. See our full overview on the buying and selling hub.

Thinking about buying a business?

Book a discovery call. Tell us what you’re looking at and where you’re at in the process. We’ll tell you what we’d look at, what we’d be worried about, and how we can help.

Or explore our Buying a Business service page and Financial Due Diligence page for more detail.