Selling a business by owner, without a broker

Is a private sale right for you

A private sale saves a broker's commission. It doesn't save the work behind it. You take on valuing the business, screening enquiries, negotiating, and preparing or reviewing the contract, either yourself or with a lawyer and accountant. See business brokers for what a commission usually buys. A private sale can suit an owner who already has a buyer in mind, such as an employee, a competitor or someone in their network.

Valuing it yourself

Business.gov.au lists three common valuation methods:¹

• Market analysis: comparing your business to similar businesses for sale or recently sold. This isn't a formal valuation, but it can give you an idea of your market price.¹
• Net asset value: what the business owns minus what it owes.
• Return on investment: using net profit to work out the business's value to a buyer.

See business valuation for how a multiple relates to your price.

Finding buyers without a broker's list

Business.gov.au lists the usual channels: business brokers or real estate agents, digital media such as social media or email marketing, traditional media, your existing networks, word of mouth, and current or former employees and customers.¹ A listing on a marketplace like Signetry covers the digital media channel.

Check whether your state or territory has rules on what you must disclose to a buyer.¹ If the Privacy Act covers your business, make sure you comply with the Australian Privacy Principles when disclosing any personal information to potential buyers¹². Most small businesses, with an annual turnover of $3 million or less, aren't covered by the Privacy Act³. But selling personal information, such as a customer database, counts as trading in personal information, and the Privacy Act covers any business that does that². Trading means collecting or disclosing personal information for a benefit, service or advantage. It is not trading if every individual concerned consents, or if the law authorises or requires it⁴. Selling the whole business by a change of ownership or a sale of shares, where the personal information is kept within the business, is not trading⁴. The OAIC advises a vendor to avoid giving a prospective buyer the names and other identifiers of its customers during due diligence².

The obligations that don't change without a broker

When negotiating the sale, make sure the information you give about your business is accurate and true. You must not engage in misleading or deceptive behaviour.¹ Overstating profit is the kind of claim this rule targets.

Negotiating still means agreeing a price, a deposit (usually 10% of the sale price), a settlement period, and any handover training.¹ The sale contract still needs to cover the price, payment method, handover date, the assets included, and any restraint clauses stopping you competing with the buyer afterward.¹ See the contracts guide for what else it should cover.

An employer must give an employee written notice that their job is ending, or pay instead of notice.⁵ Exceptions include casual employees, employees engaged for a set period or season, and employees dismissed for serious misconduct⁵. The notice rule still applies to an employee transferring to the new owner⁶.

Timing and finishing the sale

Without a broker, the end-of-sale admin is on you: transferring leases, licences and permits, and finalising tax returns and business activity statements¹. If you're selling your business, cancel your ABN: you cannot transfer an ABN⁷. Before you cancel it, make sure you've met any lodgment, reporting and payment obligations⁷. You can transfer your registered business name to the new owner, or cancel it¹. Licence transfers can take up to 12 months, so start early.¹ The tax guide covers CGT and GST for a private sale, including the small business CGT concessions and the conditions for a GST-free sale of a going concern.