Buying a Business in South Australia – A Step-by-Step Guide

Buying an existing business can be a faster way to enter the market than starting from scratch — but it comes with risks. Whether you’re taking over a local café in Norwood, purchasing a plumbing business in the Adelaide Hills, or acquiring a professional services firm in the CBD, buying a business in South Australia requires careful legal, financial, and operational checks.

This extended guide explains the steps, documents, and considerations needed to make your business purchase a success.

Step 1: Conduct Thorough Research and Due Diligence

Due diligence is the investigative process you complete before buying a business to verify its financial performance, legal standing, and operational health. In South Australia, this step is crucial — it’s far easier to walk away before signing a contract than to try to unwind a bad deal later.

Your due diligence should confirm:

• Financial viability — sales figures match what the seller claims, cash flow is sustainable, and profits are realistic.

• Legal compliance — the business holds the correct licences and permits, is not involved in litigation, and complies with workplace laws.

• Asset ownership — all plant, equipment, and intellectual property being sold are owned outright (or leases are transferable).

• Customer and supplier stability — key clients and suppliers are likely to stay after the handover.

• Employee matters — staff are engaged under compliant contracts, and entitlements are accurately recorded.

Step 2: Engage Professional Advisers Early

Buying a business without professional guidance is like doing surgery without a surgeon. You’ll need:

• A commercial lawyer — to review contracts, advise on purchase structure, check leases, and protect your legal position.

• An accountant — to assess profitability, review tax implications, and identify any unusual financial activity.

• Industry specialists — for example, hospitality consultants, IT auditors, or workplace health and safety experts.

This team will help you spot risks that may not be obvious — such as supplier exclusivity clauses, franchisor restrictions, or unfavourable lease renewal terms.

Step 3: Gather and Review Essential Documentation

Before finalising the deal, request copies of:

Financial Records

• Profit & loss statements (ideally three years).

• Balance sheets.

• BAS returns.

• Debtors and creditors lists.

Asset & Stock Lists

• Equipment, plant, and fittings with valuations and proof of ownership.

• Warranties and maintenance records.

• Stock levels and agreed valuation method at settlement.

• PPSR searches to ensure no third-party security interests exist.

Customer & Supplier Details

• Lists with contact information.

• Any exclusivity agreements.

Employee Information

• Job descriptions, pay rates, years of service.

• Accrued leave entitlements.

• Awards or enterprise agreements applying.

Contracts & Leases

• Premises lease (including term, rent review, and assignment clauses).

• Key supplier or client contracts.

• Franchise disclosure statement (if applicable).

Step 4: Decide on the Purchase Structure

The two main approaches are:

1. Asset purchase — you buy selected business assets (e.g., equipment, stock, goodwill). You avoid most past liabilities but may need to renegotiate contracts and leases.

2. Share purchase — you buy the company that owns the business. Contracts and relationships may stay intact, but you also inherit all company liabilities.

Your choice will depend on risk tolerance, tax strategy, and operational needs. Always get legal and accounting advice before deciding.

Step 5: Negotiate Price and Payment Terms

Price is more than just a number. Consider:

• Holdbacks/retentions — withholding part of the payment until profit targets are met or warranties are satisfied.

• Instalments — paying over time rather than in one lump sum.

• Working capital adjustments — agreeing how stock, receivables, and payables will be finalised at settlement.

Step 6: Document the Transaction

The Contract for Sale of Business should include:

• Seller warranties and representations.

• A non-compete clause preventing the seller from starting a rival business.

• Settlement and handover arrangements.

• Landlord or franchisor consent requirements.

Even seemingly minor clauses — such as definitions of goodwill — can have big financial implications.

Step 7: Plan for Transition and Integration

Many buyers focus on the purchase but neglect the handover period. To maximise success:

• Meet with key customers and suppliers before completion.

• Arrange employee introductions and clarify roles.

• Set up systems for accounting, payroll, and compliance from day one.

• Schedule training for unfamiliar equipment or software.

Common Mistakes to Avoid When Buying a Business

1. Skipping due diligence — assuming everything is as the seller claims.

2. Failing to check PPSR — risking buying encumbered assets.

3. Ignoring lease terms — being stuck with a short or unfavourable lease.

4. Overestimating goodwill — paying too much for brand recognition without verifying customer loyalty.

5. Not getting specialist legal advice — missing critical protections.

FAQs – Buying a Business in South Australia

What is the difference between buying assets and buying shares?

Asset purchases allow you to choose what you buy and avoid many liabilities. Share purchases may be simpler for continuity but carry more risk.

Do I need to pay GST on a business purchase?

If the sale meets the GST-free ‘going concern’ rules, GST may not apply. Your accountant can confirm.

What is a non-compete clause?

A contractual term that stops the seller from operating a competing business for a set time and within a defined area.

How long does the process take?

Anywhere from a few weeks to several months, depending on due diligence, finance approval, and contract negotiations.

Protect Your Investment with Expert Advice

Buying a business is one of the most significant financial decisions you’ll make. The right legal, accounting, and industry-specific advice can mean the difference between a thriving investment and a costly mistake.

If you’re considering buying a business in South Australia, take advantage of our complimentary no-obligation telephone consult to discuss the purchase in more detail.

This article is for general information only and is not a substitute for legal advice. For advice specific to your situation, please contact our office.