Preparing an Australian business for sale takes 12 to 24 months of deliberate work, and the sequence matters more than the checklist. Ownership structure has to be settled first because it cannot be changed close to a sale. Financial records, compliance gaps and key person dependency come next. Cosmetic improvements come last. From 1 July 2027, changes to capital gains tax give that sequence a deadline it did not have before.
What preparation actually means
Most owners are told to prepare their business for sale and handed a list of things buyers value: recurring revenue, a spread of customers, a management team that runs the business without them, clean accounts. That list is accurate. It is also not very useful on its own, because it describes a destination rather than a route, and because the items on it take wildly different amounts of time to fix.
What follows is about sequence. Which things have to be done first because they cannot be undone late, which things buyers actually test, and what can safely be left until the last few months. For what drives the multiple up or down, and by how much, see How Much Is My Business Worth? For whether now is the right time to sell at all, see When Is the Right Time to Sell Your Business?
The deadline that has just been added to exit planning
Preparation has always been argued on value. As of this year it also has a date attached.
The Treasury Laws Amendment (Tax Reform No. 1) Act 2026 received Royal Assent on 26 June 2026. From 1 July 2027 it replaces the 50% capital gains tax discount for individuals and trusts with cost base indexation, and introduces a 30% minimum tax rate on capital gains. Indexation requires a 12 month holding period and is not available to companies, superannuation funds or foreign residents.
There is a transitional rule that matters to anyone selling around that date. All CGT assets held on 30 June 2027 are treated as sold immediately before 1 July 2027 and reacquired at market value. That notional gain is disregarded and deferred rather than taxed at the time. When you eventually sell, your gain splits in two: the deferred portion accrued before 1 July 2027, taxed under the old rules including the 50% discount if you qualify, and the portion accrued after, taxed under indexation with the 30% floor. An apportionment election based on growth rate will be available as an alternative to market value, with the detail to come by legislative instrument.
Two caveats. First, this is not a reason to rush a sale. A business taken to market underprepared to beat a tax date will usually lose more in price than the tax change costs, and the transitional rule is specifically designed so that value built before July 2027 keeps its existing treatment. Second, at the time of writing the government has said scrip-for-scrip rollovers and earnout arrangements are intended to be carved out following consultation, but no legislative detail has been published. If your likely deal involves rolling equity or a deferred earnout, that gap is unresolved.
What it does change is the value of deciding early. Tax outcomes on a business sale are largely determined by decisions made years beforehand, and there is now a fixed date against which those decisions should be tested. This is a matter for your accountant or tax adviser on your specific circumstances, not something to resolve from an article.
Start with structure, because it is the one thing you cannot fix late
Who owns the shares determines what you keep. An individual, a family trust, a holding company and a self-managed superannuation fund all produce materially different outcomes on the same sale price, and the differences run to hundreds of thousands of dollars on a mid-market transaction.
The problem is that restructuring on the eve of a sale rarely works. Moving shares between entities is itself a CGT event and can trigger duty. Anti-avoidance provisions look unkindly on restructures with no purpose other than the tax outcome. And several of the concessions that might apply have holding period requirements measured in years, not months. Our analysis of the Australian mid-market indicates this is the single most common preparation failure: owners who did everything else well, and discovered eighteen months too late that the shares sat in the wrong entity.
One thing to check early, and then set aside. Australia has four small business CGT concessions, and owners frequently assume they will apply. For most businesses in the $2M to $25M EBITDA range they will not. The concessions require either aggregated turnover under $2 million, or net assets of the owner and connected entities under $6 million. A business generating $2M in EBITDA is worth several times the $6 million ceiling on its own.
The 24 month sequence
Our analysis of the Australian mid-market indicates the following ordering produces the best result. The logic is simple: the things that take longest and cannot be reversed go first.
| When | What to do | Why it sits here |
|---|---|---|
| 24–18 months out | Settle ownership structure with your accountant. Resolve any shareholder or partnership disagreements. Begin building management depth beneath you. | Irreversible or slow. Structure changes need time to season; a management layer takes years, not months, to become credible to a buyer. |
| 18–12 months out | Fix compliance gaps: outstanding ASIC lodgements, employee record keeping, award and superannuation compliance, IP ownership, unwritten customer arrangements. | These are found by the buyer’s lawyers with certainty. Fixing them costs money. Being found with them costs price. |
| 12–6 months out | Clean up the financials. Normalise, document add-backs, move to reliable monthly management accounts. Reduce customer concentration where you realistically can. | Buyers want three years of records they can rely on, so the earlier the data improves, the more of the look-back period is clean. |
| 6–3 months out | Assemble the data room. Formalise contracts. Resolve any litigation or disputes. Brief your accountant and lawyer that a process is coming. | This is assembly work, not repair work. It only goes quickly if the previous stages were done. |
| 3–0 months out | Advisor selection, information memorandum, buyer list, presentation of the business. | Genuinely last. Nothing here fixes a substantive problem; it presents what you have. |
The common mistake is running this list backwards: starting with presentation three months out, and discovering the structural and compliance problems during the buyer’s due diligence, when every one of them becomes a negotiating lever for the other side.
The compliance gaps buyers’ lawyers find
These turn up in almost every due diligence. Each is cheap to fix beforehand and expensive to be caught with.
- Unlodged financial reports. A proprietary company is "large" if it meets at least two of three tests: consolidated revenue of $50 million or more, consolidated gross assets of $25 million or more, or 100 or more employees at year end. Large proprietary companies must lodge audited financial reports with ASIC. Plenty of businesses cross these thresholds without noticing, particularly on the gross assets test. ASIC enforces this: in 2025 it issued more than $2.2 million in infringement notices to twelve large proprietary companies for failing to lodge. Discovering this in due diligence is a live liability, not a technicality.
- Employee records. Fair Work requires employee records to be kept for seven years. Where records are absent, the employer carries the burden of disproving an employee’s wage claim in court. A buyer’s lawyers will price that reversed onus as an open-ended liability, because that is what it is.
- Employment agreements. Written agreements that are current, compliant, and match what actually happens. The usual gaps: agreements signed years ago that no longer describe the role or the pay arrangement, long-serving staff with nothing in writing at all, bonus and commission arrangements recorded in email or not recorded, leave entitlements administered inconsistently with what the award or agreement requires, and no assignment of intellectual property created by employees in the course of their work. A buyer’s lawyers read the agreements against current legislation and against your payroll data. Any gap between those three becomes a warranty you are asked to stand behind.
- Contractor classification. Since 26 August 2024 the Fair Work Act has defined employment by reference to the real substance, practical reality and true nature of the working relationship, taking account of how the contract is performed rather than what it is called. Misclassification is expensive on three fronts at once: back-paid entitlements, the superannuation guarantee charge, and sham contracting exposure, where the defence now requires the employer to have held a reasonable belief that the arrangement was genuine. Superannuation is the part most often missed, because a contract wholly or principally for a person’s labour attracts superannuation even where the worker is genuinely a contractor. Test each contractor relationship against the current definition before a buyer does it for you.
- Award and superannuation compliance. Historical underpayment is one of the most common findings in Australian mid-market due diligence, and it does not go away on a share sale. It travels with the entity the buyer is acquiring. Identifying and remediating it yourself is unpleasant and finite. Having a buyer identify it is neither.
- Record retention generally. The ATO requires most business records to be kept for five years, and records relating to CGT assets for as long as you hold the asset plus five years after you dispose of it. ASIC requires company records for seven years. A business that cannot produce its own history slows every stage of a sale.
- IP and contracts. Ownership of intellectual property developed by contractors rather than employees is a routine gap. So are key customer relationships that run on a handshake. Both are fixable in advance and awkward to fix once a buyer is watching.
Financial records: what buyers actually ask for
Three years of financial statements is the floor, not the target. At this deal size a serious buyer will commission an independent quality of earnings review, and what that review wants is not just annual accounts but reliable monthly management accounts across the same period, a defensible bridge from statutory profit to normalised EBITDA, and an explanation of every add-back that a sceptical third party can follow.
Whether your accounts are audited is a separate question from whether they are credible. Many businesses in this range are small proprietary companies with no audit obligation at all, and that is not a problem. What matters is consistency: revenue recognised the same way every year, add-backs that are genuinely non-recurring, and no unexplained movements. Accounts prepared to minimise tax rather than to reflect performance take longer to normalise and attract more scrutiny, which is a cost paid in both time and price.
Key person dependency
Owner dependency is the item on a preparation list that most reliably costs money, and the one that takes longest to fix. It is also the one owners are least well placed to assess about themselves.
The test a buyer applies is not whether you work hard. It is what happens if you are not there. Who holds the key customer relationships. Who prices the work. Who the staff go to when something breaks. If the honest answer to most of those is you, a buyer has three options: pay less, structure a large part of the price as an earnout contingent on you staying, or walk. Most choose one of the first two, which is why owner dependency is the usual reason an owner ends up locked into the business for two or three years after selling it. See what an earnout like that is actually worth to you.
Fixing it means genuinely transferring relationships and decisions, not writing procedure documents. That takes eighteen months or more, which is why it belongs at the start of the sequence rather than the end.
How preparation shows up in your warranty position
Preparation also determines the warranties you end up giving, and what they cost to insure. That has become more concrete as warranty and indemnity insurance has moved into the Australian mid-market.
W&I insurance covers a buyer’s loss from a breach of the warranties you give in the sale agreement, and it increasingly allows a seller to walk away at completion rather than leaving money at risk for two years. Pricing has fallen sharply: the average rate on line across Australia and New Zealand was 0.88% of the insured limit in 2025, down from 1.09% in 2024, and mid-market deals currently price at roughly 0.7% to 1.3% of the coverage amount. Deals from around $5 million in enterprise value are now insurable. Lander & Rogers estimates that up to 60% of Australian deals above $20 million enterprise value are now insured.
The link to preparation is direct. Underwriters price off the quality of the seller’s disclosure and the depth of the due diligence behind it. A seller with organised records, a thorough disclosure letter and no unexplained gaps gets a better rate, fewer exclusions and broader cover. A seller who cannot evidence their own compliance gets warranties carved out of cover altogether, which puts that risk straight back onto their own balance sheet after completion. So preparation affects not just the headline price but how much of it you keep without contingency.
What preparation cannot fix
The preparation argument gets oversold. Four things it will not fix.
Preparation cannot make a declining business look like a growing one. If earnings are falling, no amount of documentation changes what a buyer is being asked to buy, and the right answer is often to fix the business and sell later rather than to prepare a sale now. Preparation cannot manufacture a buyer universe that does not exist: in some sectors and at some sizes there are simply few credible acquirers, and that is a matter of who is buying, not how ready you are. It cannot resolve a genuine disagreement between shareholders about whether to sell at all. And it cannot substitute for market timing, which is largely outside your control.
There is also a point of diminishing returns. Preparation that stretches past about two years often means the business is being held back from other decisions in service of a sale that keeps receding. If you find yourself in a third year of getting ready, the question worth asking is whether you actually want to sell.
Where M&A Concierge fits
Most of what is described here is work for you, your accountant and your lawyer, or a specialist exit or succession advisor, not for an M&A advisor. That is deliberate: the preparation that matters happens well before anyone runs a sale process, and an owner who waits for an advisor to tell them to fix their structure has usually left it too late.
Where it does connect is at the end of the sequence. The advisor you choose determines how the work you have done is presented, and which buyers see it. M&A Concierge works on M&A advisor selection: we match business owners with the right advisor for their business, drawn from a proprietary M&A advisor database spanning 100+ industry sectors across the Australian mid-market. Our fee is a uniform referral rate model, paid by the advisor rather than by you, and the rate does not change according to which advisor is recommended. If you would rather run that search yourself, How to Find the Right M&A Advisor in Australia sets out what to look for.
Work backwards from the things that cannot be changed quickly. Settle your ownership structure with your accountant first, because restructuring close to a sale rarely works. Then close compliance gaps, then clean up financial records, then reduce dependency on you personally, and only then think about presentation. Allow 12 to 24 months. Preparation done in the last three months before going to market is presentation, not preparation.
Typically 12 to 24 months to do properly. Some items are quick: assembling a data room, formalising contracts, tidying financial presentation. Others are not. Building a management team that a buyer believes can run the business without you takes 18 months or more, and changing ownership structure needs to be done years rather than months ahead. Owners who begin two to three years before a target sale date have meaningfully more options than those who begin six months out.
Earnings they can rely on and a business that keeps working after you leave. In practice that means three years of consistent financial records with a defensible normalised EBITDA, revenue that is recurring or contracted rather than dependent on a handful of customers, a management team that holds the key relationships and decisions, documented processes, clean legal and tax standing, and no unresolved employee entitlement exposure. Where a buyer finds gaps, they price them.
Transfer relationships and decisions, not just knowledge. Move key customer relationships to named people other than you, delegate pricing and quoting authority, make sure staff escalate to a manager rather than to you, and then step back far enough to test whether it holds. Writing procedure manuals does not achieve this on its own. Allow at least 18 months, because a buyer will want to see that the arrangement has been operating for a while rather than that it was assembled for the sale.
Usually not. A proprietary company is only required to lodge audited financial reports with ASIC if it is a large proprietary company, which means meeting at least two of: consolidated revenue of $50 million or more, consolidated gross assets of $25 million or more, or 100 or more employees. Many businesses in the $2M to $25M EBITDA range meet none of these. What buyers need is consistency and evidence rather than an audit opinion, since a serious buyer will commission their own quality of earnings review regardless. If you do meet the large proprietary thresholds and have not been lodging, resolve that well before going to market.
Yes, but it changes the shape of the deal rather than just the price. Buyers manage the risk by structuring a larger portion of the consideration as an earnout or deferred payment contingent on you staying, by requiring a longer handover, or by discounting the multiple. If you want a clean exit at settlement, reducing your personal indispensability is the single most valuable preparation you can do.
It depends on the structure. In a share sale the employing entity does not change, so employment simply continues and accrued entitlements stay on the balance sheet the buyer is acquiring. In an asset sale, the Fair Work transfer of business rules engage: personal and carer’s leave, parental leave and continuous service must be recognised by the new employer, while annual leave and redundancy entitlements can in some circumstances be declined by an unrelated buyer, in which case you pay them out on termination. Long service leave is governed by state legislation and generally follows the employee.
Preparation is worth doing regardless. On the tax question specifically, the reforms taking effect from 1 July 2027 include a transitional rule that treats assets held on 30 June 2027 as reacquired at market value, so gains accrued before that date generally retain their existing treatment even if you sell later. That reduces the case for rushing. Whether your particular circumstances change that conclusion is a question for your accountant or tax adviser, not one to settle from an article.