Painting Business Buyer's Checklist: What to Verify Before You Buy in Australia

The Complete Painting Business Buyer's Checklist

Use this checklist when you have an Information Memorandum or have engaged directly with a seller. Complete each phase before moving to the next.

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Phase 1: Investment Case Assessment

Before you look at any numbers, assess whether this is structurally a good business to buy.

Customer and Revenue Mix

• Obtain a breakdown of revenue by customer type: commercial maintenance, commercial project, residential repaint, residential new build — for each of the last three financial years
• Verify that commercial maintenance revenue (strata, aged care, government, facilities management) accounts for at least 30% of total revenue
• Identify the top 10 clients by revenue — are any individual client relationships that represent more than 20% of total revenue?
• Confirm whether the top commercial clients have ongoing maintenance agreements or are project-by-project relationships
• Ask when the last major commercial contract was renewed and what the notice period is
• Identify what percentage of residential revenue is new builds vs repaints (new builds are cyclical; repaints are more stable)

Recurring Revenue Quality

• Request copies of all active maintenance agreements — check scope, pricing, term, and renewal rights
• Verify that repeat commercial clients have been doing business with the company for more than three years
• Confirm the quoting pipeline for the next three months — is there a forward work book or does the business operate week-to-week?

Market Position

• Understand what the business is actually known for — is there a specialty (heritage, commercial, industrial, high-rise)?
• Ask how new commercial clients find the business — relationship referral, tender panels, or cold approach?
• Check whether the business is on any government or institutional tender panels (these have value and take time to get onto)

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Phase 2: Owner Dependency Assessment

This is often the most important phase in a painting business evaluation.

• Who generates new commercial work? Is it the owner personally or a business development/estimating function?
• Who quotes commercial jobs — owner, a dedicated estimator, or a foreman?
• What happens to the quoting pipeline if the owner is unavailable for two weeks?
• Do commercial clients have a direct relationship with the owner or with the business?
• Is there a supervisor or foreman who runs crews day-to-day without owner involvement?
• Would any key staff members leave if the owner left? (Ask them — after confidentiality is established)
• Does the seller have direct mobile relationships with the 3-5 largest commercial clients? If so, what's the transition plan?
• Ask for the seller's planned involvement post-settlement — minimum 3-month handover is standard; 6 months is better for commercial-heavy businesses

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Phase 3: Financial Verification

• Obtain tax returns and financial statements for the last three full financial years
• Request management accounts for the current financial year to date
• Verify that the revenue and EBITDA in the IM or broker teaser matches the tax returns — reconcile any discrepancies before proceeding
• Identify all owner add-backs and verify each one is legitimate (owner's salary, personal vehicle use, personal expenses through the business)
• Check gross margin by job type — commercial and residential should have different margins; painting typically runs 30–45% gross
• Identify any unusually profitable or unusually low-margin projects in the last 12 months — normalise these
• Verify WIP (work in progress) accurately — unfinished jobs can be a significant balance sheet item
• Check debtor days — commercial painting businesses sometimes carry long debtor tails; anything over 60 days warrants investigation
• Confirm superannuation and payroll tax are fully paid and compliant
• Ask whether any revenue is cash-only or unbanked — this creates a financing problem and a valuation problem

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Phase 4: Licensing and Compliance

Licensing in Australia varies by state. Do not skip this phase.

NSW:

• Verify the current Home Building Act (HBA) contractor licence for painting (class: painting, decorating and glazing)
• Confirm the licence holder is either the buyer or a Nominated Supervisor who will remain post-settlement
• Check NSW Fair Trading licence history for any complaints, conditions, or suspensions

Victoria:

• Verify the domestic builder licence (or commercial builder licence if the business does significant commercial work)
• Check Victorian Building Authority (VBA) licence history

Queensland:

• Verify the QBCC licence — painting and decorating class
• Check QBCC licence history and any MFR (minimum financial requirements) history

All states:

• Confirm public liability insurance is current and the policy limit is adequate for the size of jobs the business takes on (minimum $10M for commercial work)
• Confirm workers' compensation insurance is current and premiums are paid
• Check whether any jobs have active warranty claims or defect rectification obligations
• Verify any Work Health and Safety (WHS) compliance — particularly for work at heights, elevated work platform operation, and hazardous materials (lead paint)

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Phase 5: Operational Assessment

• Inspect all vehicles — make, model, year, condition, and whether they're owned or financed
• Confirm remaining finance on any vehicles — this debt transfers with an asset sale unless explicitly excluded
• Inspect spray equipment, elevated work platforms (EWPs), and scaffolding — check service records and age
• Get an independent assessment of any EWP or scaffolding over five years old — replacement cost can be significant
• Understand the subcontractor vs employee model — subcontractors reduce payroll costs but create ATO risk if they're treated like employees
• If the business uses subcontractors, verify they hold their own licences and insurance
• Ask for the crew roster — names, roles, tenure, and employment status (employee vs subcontractor)
• Understand where the supply accounts sit — paint supplier trade accounts are in the seller's name and may not transfer automatically
• Ask about the quoting and job management system — is it software-based (ServiceM8, Tradify, simPRO) or manual?
• Review the job completion and invoicing process — is there a documented system or does it run through the owner?

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Phase 6: Deal and Negotiation Flags

Use this phase to identify items to address in your offer or LOI.

• Is this an asset sale or share sale? (Most small painting business transactions are asset sales — verify what's in and what's out)
• What assets are included in the asking price — vehicles, equipment, tools, WIP, debtors?
• Are there any personal assets mixed into the business (e.g., a vehicle that's partly personal)?
• What is the working capital position at sale — who collects the existing debtors?
• Is there a restraint of trade clause? What area and what term? (Standard for a painting business is 2-3 years, within the existing operating area)
• Has the seller engaged a business broker or selling direct? If through a broker, who does the broker represent and what are their obligations?
• What is the seller's motivation for selling and timeline? Retirement? Partnership dispute? Genuine business exit?
• Is vendor finance available? This is worth asking — painting businesses often suit a vendor-financed component given the relationship-dependent nature of the revenue

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Post-Checklist: Scoring your result

After completing the checklist, score each phase:

Phase 1 (Investment Case): Strong pass — high commercial percentage, documented repeat contracts. Marginal — mostly residential or project-based. Fail — revenue concentrated in new builds, no recurring commercial work.

Phase 2 (Owner Dependency): Strong pass — independent foreman, estimating function, minimal owner-client relationships. Marginal — owner does all quoting but strong staff. Fail — owner is the sole reason commercial clients call.

Phase 3 (Financials): Strong pass — clean books, consistent margins, minimal add-backs. Marginal — some cash or normalisation issues, manageable. Fail — material revenue unexplained, large add-backs, declining trend.

Phase 4 (Licensing): Strong pass — all licences current, no history. Marginal — licence issues that can be resolved pre-settlement. Fail — licence conditions, serious complaints history, or structural licensing problem under new ownership.

Phase 5 (Operations): Strong pass — modern equipment, software systems, stable crew. Marginal — some equipment needs attention, systems are manual but functional. Fail — major capex requirement within 12 months, crew instability, no systems.

Phase 6 (Deal): Note the negotiation items — these don't determine whether to proceed, but they determine the terms on which you should.

A "fail" on any of Phases 1–4 is generally a reason to walk or renegotiate the price significantly. A "marginal" on multiple phases warrants a price adjustment that accounts for the risk you're taking on.

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This checklist covers the evaluation phase. For the full acquisition process — from search to settlement — see Module 2 of the Playbook.

Related resources: owner dependency scorecard | trades business assessment checklist