Table of Contents

Why the Post-Signing Phase Is Where Deals Are Made or Lost {#why-the-post-signing-phase}

Signing the business sale agreement feels like the hard part is over. It isn't. For most SME transactions in Australia, the period between signing and settlement is where the real complexity surfaces — and where deals most often unravel.

The agreement sets the terms. Everything that follows determines whether those terms actually hold. Conditions need to be satisfied, third parties need to cooperate, and both buyer and seller need to stay aligned through a process that can run anywhere from 30 days to six months, depending on the deal.

This guide walks you through each stage of the settlement process, what to expect at each step, what can go wrong, and how to protect yourself along the way.

Step 1: Conditions Precedent — What Needs to Happen Before Settlement {#step-1-conditions-precedent}

Most business sale agreements in Australia are conditional contracts. Settlement cannot proceed until specific conditions are satisfied or formally waived. These are called conditions precedent, and managing them is the first priority for both parties after signing.

Finance Approval {#finance-approval}

If the buyer is financing part of the purchase, their lender needs to formally approve the loan against the business being acquired. This is not a formality. Banks will assess the business's cash flow, asset backing, and the buyer's capacity to service the debt — and they don't always like what they see.

Finance delays are common. If the buyer's funding falls through entirely, the deal can collapse. That's why assessing buyer financial capacity before you sign matters as much as anything in the agreement itself.

Due Diligence Period {#due-diligence-period}

Even where the buyer has done preliminary work before signing, the formal due diligence period typically runs for two to four weeks post-execution. During this window, the buyer's accountant and lawyer go through financial statements, tax returns, contracts, leases, employee records, and any other material documents.

As a seller, you need to be ready to provide information promptly and accurately. Delays create doubt. Inconsistencies create more. Either one can kill a deal that was otherwise on track.

Landlord Consent and Lease Assignment {#landlord-consent-and-lease-assignment}

If the business operates from leased premises, the landlord must consent to the lease being assigned to the buyer. This is one of the most common bottlenecks in the entire process — and one of the least controllable.

Landlords have no obligation to move quickly. Some will request financial references or personal guarantees from the buyer. Others may use the opportunity to push for better lease terms. Your broker and solicitor need to be managing this proactively from the moment the agreement is signed, not waiting for problems to appear.

Regulatory and Licensing Requirements {#regulatory-and-licensing-requirements}

Depending on the industry, the buyer may need specific licences or registrations before they can legally operate the business. This is particularly relevant in hospitality, healthcare, financial services, real estate, and other regulated sectors.

Establish early which licences transfer with the business and which ones the buyer must apply for independently. Some applications take weeks. Build that into your timeline from the start.

Step 2: Deposit Handling and Statutory Trust Accounts {#step-2-deposit-handling}

When the buyer pays the deposit, those funds should be held in a statutory trust account — not released to the seller until settlement. This protects both parties and is a basic professional standard.

In Victoria and most other Australian states, licensed business brokers are legally required to hold deposits in independently audited trust accounts. If you are working with a broker who cannot demonstrate a proper trust account arrangement, that is a serious warning sign worth acting on.

Step 3: Preparing for Settlement {#step-3-preparing-for-settlement}

Once conditions are satisfied, the focus shifts to the handover itself. Several workstreams need to run in parallel during this phase.

Stock Takes and Asset Verification {#stock-takes-and-asset-verification}

Where the sale includes stock, a formal stock take is usually conducted shortly before settlement. Depending on what the contract specifies, the purchase price may be adjusted to reflect the actual stock value at that date.

Assets and equipment listed in the sale should also be verified. If anything has changed since the agreement was signed, both parties need to resolve it before settlement day — not on it.

Employee Notifications and Entitlements {#employee-notifications-and-entitlements}

This is one of the more sensitive parts of the process. Employees generally cannot be informed about the sale until the deal is close to unconditional. Once it is, there are legal obligations around notification timing and the treatment of entitlements.

Whether those entitlements transfer to the buyer or are paid out by the seller depends on the deal structure. An asset sale and a share sale are treated very differently under employment law. Your solicitor needs to advise on this specifically — it's not something to work out after the fact.

Supplier and Customer Transitions {#supplier-and-customer-transitions}

Key supplier contracts may need to be novated or renegotiated in the buyer's name. Customer relationships, particularly in service-based businesses, need careful handling to prevent attrition during the transition period.

The seller typically plays a direct role in facilitating these introductions. It's one of the reasons the handover period carries real weight.

Step 4: Settlement Day {#step-4-settlement-day}

Settlement is the point at which legal ownership transfers from seller to buyer. In practice, this means:

  • The balance of the purchase price is paid, usually via bank transfer to the trust account and then released to the seller
  • Keys, passwords, and operational access are handed over
  • Signed transfer documents are exchanged
  • Relevant registrations are updated, including ABN, business name, and any industry-specific licences

Your solicitor coordinates the settlement mechanics. Your broker should be available to handle any last-minute issues that arise between the parties — and they do arise.

Settlement is handled electronically in most cases, though some transactions still involve in-person meetings, particularly where physical assets or significant cash adjustments are part of the deal.

Step 5: Post-Settlement Obligations {#step-5-post-settlement-obligations}

Settlement is not the end of your obligations. Both buyer and seller typically carry commitments that extend well beyond the handover date.

Training and Handover Period {#training-and-handover-period}

Most agreements include a training and handover period during which the seller helps the buyer understand the operations. This typically runs for two to four weeks, though complex businesses may require longer.

Be clear on what is expected of you. The scope, hours, and duration should be defined in the agreement. Vague handover clauses are a reliable source of post-settlement disputes.

Restraint of Trade Clauses {#restraint-of-trade-clauses}

As a seller, you will almost certainly be bound by a restraint of trade clause. This prevents you from starting or working in a competing business within a defined geographic area and time period — typically one to three years.

Whether these clauses are enforceable in Australia comes down to reasonableness. Courts won't uphold an overly broad restraint, but they will enforce one that is proportionate to the goodwill being sold. Getting the drafting right matters.

Tax and Reporting Obligations {#tax-and-reporting-obligations}

Selling a business has significant tax consequences. Capital gains tax applies to most business sales, though the small business CGT concessions under Australian tax law can substantially reduce the liability for eligible sellers.

GST treatment also needs careful attention. If the sale qualifies as a "going concern," it may be GST-free — but both parties must satisfy specific conditions for that treatment to apply. If those conditions aren't met, GST at 10% applies to the purchase price, which has a real impact on the economics of the deal.

Your accountant should be involved well before settlement, not after, to structure the transaction as tax-effectively as possible.

Common Reasons Business Sales Fall Over After Signing {#common-reasons-sales-fall-over}

Understanding the risks is the first step to managing them. The most common reasons deals collapse after signing:

  • Finance falling through: The buyer's lender declines or reduces the loan after reviewing the business financials
  • Due diligence discoveries: Undisclosed liabilities, declining revenue, or lease issues that change the buyer's view of value
  • Landlord refusal: The landlord won't consent to the lease assignment, or imposes conditions neither party anticipated
  • Licensing delays: The buyer can't obtain required licences in time, and neither party wants to extend
  • Seller disclosure gaps: Information that wasn't disclosed upfront surfaces during due diligence, creating distrust that's hard to recover from
  • Buyer's remorse: The buyer gets cold feet and starts looking for contractual grounds to exit

A well-structured agreement with clear timelines and defined obligations reduces the risk of each of these. So does working with a broker who stays actively involved through to settlement, rather than stepping back once the agreement is signed.

At Everest Commercial Property & Business Brokers, our role doesn't end at heads of agreement. We manage the transaction through to settlement — coordinating with solicitors, accountants, landlords, and both parties to keep the deal on track when it matters most.

FAQs {#faqs}

How long does business sale settlement take in Australia?
It varies. Simple transactions can settle in 30 to 60 days. Deals involving lease assignments, licensing requirements, or finance approvals typically take 60 to 120 days. Some run longer, particularly where third parties are slow to respond or conditions take time to satisfy.

What is the difference between unconditional and conditional contracts in a business sale?
A conditional contract means settlement can only proceed once specific conditions are met — finance approval, due diligence sign-off, and so on. An unconditional contract means both parties are legally committed to complete with no outstanding conditions. Once a contract goes unconditional, withdrawing carries serious legal and financial consequences for the party that walks.

Can a buyer pull out after signing a business sale agreement?
Yes, but the consequences depend on the contract terms and whether conditions are still outstanding. During a due diligence or finance condition period, the buyer may have the right to exit without penalty if a condition isn't satisfied. After the contract goes unconditional, the buyer risks losing their deposit and potentially facing a damages claim.

What happens to employees when a business is sold?
It depends on the structure. In an asset sale, employees are technically terminated by the seller and may be offered new employment by the buyer. In a share sale, employees remain employed by the company, which simply changes hands. Either way, accrued entitlements — annual leave, long service leave — must be handled correctly under the Fair Work Act.

Do I need a solicitor for business sale settlement in Australia?
Yes. A business sale agreement is a legally binding contract with significant financial consequences. A solicitor experienced in commercial transactions should review the agreement before you sign and manage the settlement process. Your broker coordinates with your legal team but cannot provide legal advice.

What is a going concern for GST purposes?
A sale qualifies as a going concern when the seller supplies everything necessary for the buyer to continue operating the business, and both parties agree in writing that the sale is of a going concern. When those conditions are met, the sale is GST-free. If they're not, GST at 10% applies to the full purchase price — a material difference in the economics of the deal.

What should I do if the buyer tries to renegotiate after signing?
Post-signing renegotiation is a common tactic, particularly if the buyer believes they've found leverage during due diligence. Whether you're obliged to engage depends on whether the issue raised is a genuine contractual matter or simply buyer's remorse. Your solicitor should assess the situation. Your broker should help you manage the negotiation without unnecessarily jeopardising the deal.

What to Do Next {#what-to-do-next}

The business sale settlement process has more moving parts than most sellers expect. Finance, due diligence, leases, licences, employees, tax, and legal documentation all need to be managed in parallel — often under real time pressure.

The most effective thing you can do is get the right support in place before you sign, not after.

If you're preparing to sell your business or are already navigating the post-signing process, the team at Everest Commercial Property & Business Brokers can help you manage every stage with the rigour and confidentiality the process demands. Reach out at everestcpbb.com.au or call (03) 7065 4078.