Buying a business in WA: due-diligence checklist

Direct answer: Before buying a business, verify what is being purchased, who owns it, whether the financial claims are reliable, and whether the lease, licences, employees, contracts and assets can transfer. Make the sale agreement conditional on essential due diligence, finance and third-party approvals before committing unconditionally.

Obtain advice urgently if

• you are being asked to sign or pay a deposit immediately;
• the seller will not provide financial or legal records;
• the premises lease is close to expiry;
• landlord, franchisor or regulator consent is uncertain;
• assets are subject to security interests;
• key staff, licences or contracts may not transfer;
• the seller or business appears insolvent;
• the purchase structure or tax treatment is unclear.

Transaction and ownership

• Correct legal names of buyer and seller.
• Asset sale or share/unit sale identified.
• Business name, domain names and social accounts included.
• Complete asset and excluded-asset schedule.
• Intellectual property ownership checked.
• Seller has authority to transfer every asset.
• Required company, trustee or partner approvals obtained.
• Deposit terms and stakeholder are clear.

Financial review

• Financial statements for an appropriate period.
• Tax returns, BAS and notices of assessment.
• Bank and merchant records supporting turnover.
• Sales by product, site or customer.
• Normalised earnings and owner adjustments reviewed by an accountant.
• Debtors, creditors and aged balances.
• Stock records and obsolete stock.
• Capital expenditure and maintenance needs.
• Cash-flow and working-capital requirement.
• No reliance on forecasts without testing assumptions.

Assets, stock and PPSR

• Plant and equipment register.
• Ownership, finance and lease documents.
• PPSR searches against seller and relevant serial-numbered goods.
• Security interests to be released at settlement.
• Condition and remaining life of equipment.
• Stocktake method, valuation basis and settlement adjustment.
• Warranties, maintenance contracts and software licences.

Premises

• Complete lease, variations and disclosure documents.
• Remaining term and options.
• Rent, reviews, outgoings and arrears.
• Permitted use and approvals.
• Assignment or new-lease process.
• Landlord consent and required buyer information.
• Security and personal guarantees.
• Fit-out ownership and make-good obligations.
• Settlement conditional on acceptable premises rights.

Contracts, customers and suppliers

• Material customer and supplier contracts.
• Assignment, consent and termination clauses.
• Customer concentration and recurring revenue tested.
• Rebates, warranties, refunds and outstanding claims.
• Restraint and non-solicitation protection.
• Transitional assistance from the seller.

Employees

• Employee list, roles, pay and length of service.
• Employment agreements and awards.
• Accrued leave and other entitlements.
• Superannuation and payroll compliance.
• Workers’ compensation and claims.
• Which employees will be offered employment.
• Responsibility and adjustment for entitlements.
• Key-person retention risk.

Licences, privacy and compliance

• Licences, permits and accreditations.
• Whether each approval transfers or requires a new application.
• Industry compliance and inspection history.
• Complaints, disputes and regulatory notices.
• Privacy, customer-data and cybersecurity arrangements.
• Franchise documents and franchisor consent where relevant.

Sale agreement and settlement

• Due-diligence, finance and consent conditions.
• Warranties and disclosure by the seller.
• Purchase-price allocation reviewed by tax adviser.
• GST treatment confirmed.
• Restraint is reasonable and enforceability advice obtained.
• Adjustments and stocktake process.
• Settlement deliverables and release of securities.
• Training and handover obligations.
• Treatment of deposits, gift cards, bookings and work in progress.
• Default and termination consequences.

What happens next?

Legal Care Australia can review or prepare the sale agreement, coordinate lease assignment, identify legal due-diligence issues and assist with settlement where it accepts the transaction.

Client next step: Provide the draft agreement, information memorandum, financial records, lease and proposed deadline before signing. Obtain independent accounting and tax advice as well.

Official information

• PPSR
• ASIC
• Small Business Development Corporation WA

General information only. The required due diligence depends on the industry, transaction structure and risk profile.