SPA Key Terms Checklist for Buying a Business in Australia

SPA Key Terms Checklist: 47 Items for Australian Business Buyers

Work through this checklist when you receive a draft SPA. Mark each item as confirmed, queried, or not applicable. Bring your marked-up copy to your solicitor meeting — it will save both time and money.

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Phase 1: Parties and Asset Schedule

• Correct legal entities named. The buyer and seller entities in the SPA match the actual companies or individuals transacting. If you're buying through a new company, confirm it has been incorporated before signing.
• Correct ABN/ACN on both sides. Small error, large consequences at settlement.
• Asset schedule is complete and specific. Every asset you expect to receive is listed by name, serial number (for plant and equipment), or description. "Business assets as at [date]" is not sufficient.
• Plant and equipment list reconciles to what you inspected. Walk back through your site visit notes and confirm each item is on the list.
• Vehicles listed with rego numbers. Confirm registration is current and in the seller's (company's) name, not a personal name.
• Intellectual property explicitly assigned. Trading name, domain name, social media handles, logo trademarks, customer database, and any proprietary software or processes.
• Licences and permits listed. Contractor licences (plumbing, electrical, building), council permits, industry association memberships, software licences — all need to be transferable or reapplied for.
• Excluded assets are listed. If the seller is keeping anything (e.g. a vehicle, certain equipment, specific contracts), it should be explicitly excluded so there's no dispute later.
• Customer contracts listed or described. Are they being assigned to you? Do they require customer consent to transfer? (Some commercial contracts have change-of-control clauses.)
• Supplier contracts listed. Same question — what transfers and what needs to be renegotiated?

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Phase 2: Price and Payment Mechanics

• Purchase price matches what was agreed in the LOI. Sounds obvious. Check it.
• Deposit amount, timing, and conditions confirmed. Is the deposit refundable if conditions aren't met? Where is it held — in a trust account?
• Working capital definition is explicit. Exactly which current assets and liabilities are included. What's excluded (cash, debt, tax liabilities, employee entitlements). See the working capital adjustment article for context.
• Working capital peg (target) is specified. The agreed level of working capital to be delivered at settlement, and the period used to calculate it.
• Price adjustment mechanism is clear. Dollar-for-dollar above/below the peg? Is there a collar (range where no adjustment applies)?
• Completion accounts process is specified. Who prepares them? What accounting policies apply? What's the review period? What's the dispute process?
• GST treatment is addressed. Most business sales in Australia are GST-free as a going concern — but only if specific conditions are met (both parties GST-registered, all assets included, business operated continuously). The SPA should confirm this.
• Stamp duty allocation is addressed. In an asset sale, stamp duty on certain assets (particularly land and goodwill in some states) can be significant. Confirm who pays.
• Adjustment for inventory (if applicable). How is inventory valued at settlement? Who conducts the stocktake?

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Phase 3: Conditions Precedent

Conditions precedent are things that must happen before the deal legally completes. If they're not satisfied, either party can usually walk away.

• All conditions precedent are listed. Finance approval, landlord consent, franchisor consent, regulatory approvals, third-party consents — every condition should be explicitly listed.
• Responsibility for each condition is allocated. Who is responsible for satisfying each condition? What happens if they fail to use best efforts?
• Deadline for satisfying conditions. A date by which all conditions must be met, failing which the contract terminates (or is extended by agreement).
• Finance condition is buyer-friendly. If your bank finance falls through, does the finance condition protect you? Check the definition of "approved finance" — it should match your actual approval.
• Landlord consent mechanics. If the business has a lease, landlord consent is usually required. Who approaches the landlord? What happens if consent is refused?
• Regulatory licences confirmed transferable. For trades businesses, confirm that the relevant contractor licence (plumbing, electrical, building) can be transferred or that you hold or can obtain the equivalent.

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Phase 4: Representations and Warranties

Warranties are the seller's promises about the state of the business. If a warranty is false, you have a claim against the seller.

• Financial warranty covers the period you've relied on. The seller should warrant that the financial statements for at least the past two financial years are accurate and prepared in accordance with applicable accounting standards.
• No material adverse change warranty. The seller warrants that nothing material has changed in the business between the accounts date and settlement.
• Litigation and regulatory warranty. No current or threatened legal proceedings, disputes with regulators, ATO audits, or WorkCover claims not disclosed.
• Employee entitlements warranty. All employee entitlements (wages, superannuation, annual leave, long service leave) have been properly accrued and paid. In Australia, unpaid super is your problem post-settlement in a share sale.
• Tax warranty. All tax obligations (income tax, GST, payroll tax, FBT) have been lodged and paid up to the settlement date.
• No undisclosed liabilities warranty. No material liabilities exist other than those disclosed in the disclosure schedule.
• Key customer warranty. No key customer has indicated they will cease purchasing post-settlement. (This rarely survives negotiation in full — sellers push back — but it's worth asking for.)
• Warranty survival period is adequate. Warranties expire after a set period. For Australian SME deals, 12–24 months is standard. Anything less than 12 months is seller-friendly; push back.
• Warranty claim threshold and cap. Most SPAs include a minimum claim threshold (below which you can't sue) and a maximum cap (above which the seller has no liability). Check these are reasonable relative to the purchase price.
• Disclosure schedule reviewed. Warranties are typically qualified by a disclosure schedule — things the seller has specifically disclosed that override the warranty. Read this document carefully. Everything in it is your problem post-settlement.

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Phase 5: Restraint of Trade

This is the clause that stops the seller from setting up a competing business and taking their customers with them. It's one of the most important — and most negotiated — provisions in a business sale.

• Restraint period is adequate. For a trades business in Australia, two to three years is common. Anything less than 12 months is probably unenforceable and definitely inadequate.
• Restraint area is geographic and specific. A global restraint is unenforceable. The restraint should cover the actual geographic area where the business operates — e.g. "within 50km of [suburb], [state]" or the specific service territory.
• Restraint covers the right activities. Should cover: operating a similar business, being employed by or consulting to a competitor, soliciting customers of the business, soliciting employees of the business.
• Restraint applies to related parties. Not just the seller personally, but their spouse, related companies, and (if a share sale) departing directors.
• Restraint is structured as a cascade. Courts can strike out an unenforceable restraint but may not be able to reduce it. A cascading restraint (five years, then four years, then three, then two — whichever is enforceable) is more robust than a single period.
• Seller's employment during transition is addressed. If the seller is staying on during a transition period, their role, duration, reporting line, and termination rights should be specified. What happens if they leave early?

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Phase 6: Employee and Contractor Provisions

• All employees listed by name and entitlement. The SPA or a schedule should list every employee, their role, start date, and current accrued entitlements.
• Transfer of employment obligations confirmed. Under the Fair Work Act, employees of the sold business generally transfer to the new employer with their service preserved. Confirm this is addressed explicitly.
• Long service leave obligations confirmed. State-based long service leave laws vary. In most Australian states, employees with more than 7–10 years of service have accrued entitlements that transfer to you.
• Contractor status of any workers reviewed. If the business uses contractors, are they genuinely contractors? The ATO and Fair Work Commission take a dim view of misclassification. In a share sale, any back-payment liability transfers with the company.
• Key person retention provisions (if applicable). If the business is dependent on a particular employee or manager, have you negotiated an obligation for the seller to support retaining them?
• Workers' compensation history disclosed. Any current workers' compensation claims or history of significant claims should be disclosed. In a share sale, these transfer with the company.

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Phase 7: Post-Settlement Adjustments and Dispute Resolution

• Transition assistance period is specified. If the seller is providing a handover, the duration, nature of assistance, and whether it's paid should be in the SPA, not just a verbal agreement.
• Clawback provisions for earn-outs understood. If there's an earn-out agreement component, the metrics, calculation methodology, audit rights, and dispute process must all be in the SPA.
• Adjustment accounts dispute resolution process is specified. If the working capital completion accounts are disputed, what's the escalation process? Who is the independent accountant? How are their fees allocated?
• Governing law is confirmed as Australian (correct state). The SPA should specify that it's governed by the law of the state where the business operates.
• Dispute resolution process is practical. Most SPAs include mediation before litigation. Check who appoints the mediator and where mediation is conducted.
• Force majeure and material adverse change clauses reviewed. These can affect whether conditions precedent remain effective if something unexpected happens before settlement.
• Amendment and waiver provisions understood. How does the contract change if both parties agree to adjust terms? Written and signed, presumably — but confirm.

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How to Use This Checklist

Before your solicitor review: Work through the checklist yourself when you receive the first draft. Mark each item, note the page/clause reference where you find each provision, and flag anything that's missing or doesn't match what you agreed in the LOI.

In your solicitor meeting: Hand over your marked-up copy. The items you've flagged are your starting point for the review — you've already done the indexing so your solicitor can focus on the substance.

During negotiation: Use the checklist to track which items have been resolved, which are still open, and which the seller has refused to move on. Not everything is negotiable; the checklist helps you see the full picture so you can prioritise.

Before signing: Run through the list one final time against the agreed version of the SPA. The clause you didn't check is the one you'll remember post-settlement.

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This checklist is for educational purposes and does not constitute legal advice. Before signing any Sale and Purchase Agreement, get independent legal advice from a solicitor experienced in Australian business acquisitions.