A practical guide for Australian business owners, buyers, and commercial property investors

When an Australian buyer assesses a business for sale, they’re not simply looking at the asking price or a glossy information memorandum. They’re evaluating risk, sustainability, and future earning potential through a structured due diligence process. As licensed business brokers working across Victoria and the broader Australian market, we see clear patterns in what serious buyers prioritise—and why some businesses attract strong offers while others struggle to gain traction.

This week, we break down the key factors buyers examine, the red flags that can derail a sale, and the steps sellers can take to present their business in the strongest possible light.

1. Strong and Verifiable Financial Performance

Financial transparency is the cornerstone of any successful business sale. Buyers want confidence that the business generates consistent, reliable earnings—and that those earnings can be transferred to a new owner.

What buyers look for

  • Clean, accurate financial statements (minimum 3 years) prepared by a qualified accountant
  • Stable or growing revenue trends, not erratic spikes
  • Normalised EBITDA to understand true operating performance
  • Clear separation of personal and business expenses
  • Tax compliance, including BAS, PAYG, and superannuation obligations

In Australia, buyers often request accountant‑prepared financials early in the process. If the numbers don’t align with the seller’s claims, confidence erodes quickly.

Actionable advice for sellers

  • Ensure your financials are up to date before going to market.
  • Remove discretionary or personal expenses from the business well in advance.
  • Prepare a normalisation schedule to justify add‑backs.

2. Quality of Systems, Processes, and Documentation

A business that runs smoothly without relying heavily on the owner is far more attractive to buyers. Operational maturity reduces perceived risk and increases valuation.

What buyers look for

  • Documented standard operating procedures (SOPs)
  • Reliable POS, CRM, or inventory systems
  • Clear employee contracts, award compliance, and HR policies
  • Up‑to‑date supplier agreements and service contracts
  • Evidence of regulatory compliance, especially in industries like hospitality, childcare, construction, and healthcare

Why it matters

A business with strong systems is easier to transition, easier to scale, and less likely to suffer operational disruption during handover.

 

3. Customer Base Stability and Market Position

Buyers want to understand how the business competes in the Australian market and whether its revenue is secure.

Key factors buyers assess

  • Customer concentration risk—no single client should represent more than 20–30% of revenue
  • Recurring revenue streams, such as service contracts or subscriptions
  • Brand reputation, online reviews, and industry standing
  • Market trends, including regulatory changes and competitive pressures

For example, a commercial cleaning business with long‑term government contracts will command a higher valuation than one relying on ad‑hoc residential jobs.

4. Lease Terms and Commercial Property Considerations

For businesses operating from a physical premises, the lease is often as important as the business itself. In Australia, the Retail Leases Act (state‑specific) and commercial leasing norms play a major role in buyer decision‑making.

What buyers look for

  • Remaining lease term (ideally 3–5 years or more)
  • Options to renew
  • Fair market rent and annual increases
  • Zoning compliance and permitted use
  • Condition of the premises and any required capital expenditure

If the business includes freehold commercial property, investors will also assess:

  • Yield and capital growth potential
  • Building condition and depreciation schedules
  • Local council planning overlays

A weak lease can significantly reduce buyer interest—even if the business itself is strong.

5. Staff Capability and Organisational Structure

A business with a reliable, well‑trained team is far more appealing than one dependent on the owner.

Buyers typically evaluate

  • Tenure and experience of key staff
  • Whether employees are staying post‑sale
  • Award compliance and wage accuracy
  • Training programs and onboarding processes

High staff turnover or undocumented employment arrangements are major red flags.

6. Legal, Regulatory, and Compliance Health

Australian buyers are increasingly risk‑averse, especially in industries with strict compliance requirements.

Common compliance checks

  • Licences and permits (e.g., food handling, RSA, building licences, childcare approvals)
  • Workplace health and safety (WHS) documentation
  • Environmental compliance
  • Intellectual property ownership
  • Privacy and data‑handling obligations

A business that cannot demonstrate compliance will struggle to progress past due diligence.

7. Growth Potential and Strategic Value

Beyond current performance, buyers want to understand the business’s future trajectory.

Growth indicators buyers value

  • Untapped markets or product lines
  • Scalable systems
  • Strong digital presence and SEO performance
  • Opportunities for cost optimisation
  • Industry tailwinds

For example, a manufacturing business with capacity to increase output without major capital investment is highly attractive.

8. Risk Profile and Deal Structure

Buyers assess not only the business but also the structure of the deal.

Key considerations

  • Vendor involvement post‑sale (handover period)
  • Warranties and indemnities
  • Stock valuation methodology
  • Working capital requirements
  • Vendor finance options

A flexible, well‑structured deal can widen the buyer pool and increase the final sale price.

9. Quality of the Information Memorandum (IM)

A professionally prepared IM signals credibility and reduces buyer uncertainty.

A strong IM includes

  • Clear financial summaries
  • Operational overview
  • Market analysis
  • SWOT assessment
  • Asset list and lease details
  • Transition plan

At Everest Commercial Property & Business Brokers, we prepare IMs that meet industry best practice and align with Australian regulatory expectations.

10. Due Diligence Readiness

Ultimately, buyers want a business that can withstand scrutiny.

Sellers should prepare

  • A due diligence folder with financials, contracts, HR documents, and compliance records
  • Access to cloud‑based systems for verification
  • A clear timeline for the due diligence process

Being “due diligence ready” can shorten the sale timeline and increase buyer confidence.

Final Thoughts

Australian buyers are sophisticated, data‑driven, and increasingly risk‑conscious. Businesses that demonstrate strong financials, operational maturity, compliance, and growth potential consistently achieve higher valuations and faster sales.

For sellers, preparing early—and working with a licensed brokerage—can make the difference between a smooth, profitable transaction and a stalled campaign.

If you’re considering selling, buying, or valuing a business, Everest Commercial Property & Business Brokers can guide you through every step with clarity, professionalism, and market‑tested expertise.