Published: April 2026
Selling a business is the largest financial transaction most owners will ever undertake. It is also one of the most complex. The average SME sale takes six to twelve months from listing to settlement, and that is after a preparation period that should begin twelve to twenty-four months earlier.
The businesses that achieve the best outcomes are not necessarily the ones with the highest revenue. They are the ones that are best prepared. The businesses that underperform, or where deals collapse entirely, almost always make the same avoidable mistakes.
This guide covers the 20 most common mistakes Australian business owners make when selling, and how to avoid each one.
Important note: This article provides general awareness information about the business sale process. It does not constitute tax, legal, or financial advice. Business sales involve complex tax, legal, and structural considerations. Scale Suite recommends engaging a qualified tax agent, business lawyer, and business broker or M&A adviser before proceeding with any sale.
Most business owners start thinking about selling six months before they want to exit. The optimal preparation window is 18 to 24 months. That time is needed to clean up financials, reduce owner dependency, lock in key employees, diversify the customer base, and resolve any outstanding compliance issues. Rushed sales almost always result in lower prices.
Your business is worth what a buyer will pay, not what you think it is worth. Engage an independent business valuer or M&A adviser to provide a realistic range. Owners who anchor on an emotional number (often based on what they have invested rather than what the business earns) waste months pursuing unrealistic prices. Use our business valuation estimator as a rough starting point, but get professional advice for anything serious.
Buyers value businesses on normalised earnings, not reported earnings. If your P&L includes personal expenses, above-market or below-market owner salary, one-off costs, or discretionary spending, these need to be identified and adjusted. A normalised EBITDA schedule with clear, documented add-backs is expected by any serious buyer. See our guide on what investors look at in your books.
If your books are not reconciled, your BAS history has gaps, or your accountant spends 20+ hours cleaning up your year-end file, buyers will either reduce their offer or walk away. Clean financial records are not optional. They are the foundation of every valuation and due diligence process. This means monthly management accounts, reconciled bank accounts, accurate leave provisions, and current super and ATO compliance.
The structure of the sale (whether the buyer acquires the company's shares or its individual assets) has significant implications for both parties. Each structure affects how liabilities transfer, how employee entitlements are handled under Fair Work, whether stamp duty applies, and the overall tax outcome. Both buyers and sellers should have their own tax agent and lawyer advising on the preferred structure. This is not a decision to make without professional advice.
Unpaid BAS, PAYG withholding, superannuation, or payroll tax will be identified during due diligence and either deducted from the sale price or required to be settled before completion. Worse, outstanding ATO obligations can trigger Director Penalty Notices, creating personal liability that complicates the sale. Clear all ATO obligations before going to market.
Personal expenses running through the business (car, phone, meals, family member salaries) create complexity in due diligence. While these are normalised as add-backs, excessive personal spending through the business reduces buyer confidence in the integrity of the financial records.
Buyers expect a "normal" level of working capital to transfer with the business. If you run down receivables and defer payables in the lead-up to settlement, the buyer will notice and adjust the price. The working capital peg (the agreed-upon level of working capital at settlement) is one of the most common sources of post-sale disputes.
Employee entitlements (annual leave, long service leave, personal leave balances) are real liabilities that affect the sale price. If your leave records are inaccurate or your payroll has errors, the buyer's due diligence will flag it. Ensure all employment records are current, accurate, and compliant with Fair Work requirements. See our annual leave liability analysis.
The tax implications of a business sale can be significant. There are various concessions and structures available to eligible small business owners, but eligibility criteria are specific and must be confirmed with your tax agent well in advance. Leaving tax planning to settlement week is a recipe for suboptimal outcomes. Engage your tax agent 12 or more months before a sale to understand your options.
If the business cannot function for three months without the owner, most buyers will either discount the price significantly or structure the deal with an earn-out or extended transition period. The owner who is the sole client relationship holder, the only salesperson, and the person who approves every decision is the biggest risk factor a buyer can identify.
How to fix it: Delegate client relationships to team members. Document all processes. Build a management layer. The goal is a business that can operate for 12 weeks without the owner being involved in day-to-day operations.
If one customer represents more than 25 per cent of revenue, the buyer is effectively buying a single client relationship, and they know that relationship might not survive the ownership transition. Diversify your customer base well before going to market. Use our client concentration risk calculator to see where you stand.
If one employee (your head of sales, your lead technician, your operations manager) is critical to the business and there is no succession plan, buyers will demand that person be locked in with a retention agreement or will discount the price to account for departure risk.
If your operational processes live in people's heads rather than in documented SOPs, the business is harder to transfer and riskier to buy. Document key workflows, client onboarding procedures, delivery processes, and any proprietary methodologies before going to market.
Outstanding disputes, unresolved workers compensation claims, pending Fair Work matters, or non-compliant contractor arrangements all create contingent liabilities that buyers will either require to be resolved before settlement or will price into their offer as a discount.
Business brokers and M&A advisers earn their fees by finding qualified buyers, managing confidentiality, negotiating deal terms, and keeping the process on track. Owners who try to sell directly often undervalue the business, breach confidentiality, or get stuck in negotiations. The broker's commission (typically 2 to 5 per cent of the sale price for SMEs) is almost always recovered through a better sale outcome.
If employees, customers, or suppliers learn the business is for sale before the right time, the fallout can be severe. Key employees may start looking for other jobs. Customers may begin transitioning to competitors. Suppliers may tighten credit terms. Use a formal confidential information memorandum and require prospective buyers to sign non-disclosure agreements before receiving any sensitive information.
Due diligence is the buyer's opportunity to verify everything you have told them. They will request three to five years of financial statements, tax returns, BAS lodgement history, employee records, customer contracts, lease agreements, insurance policies, and more. Having a virtual data room prepared with all documents organised and accessible speeds up the process and demonstrates professionalism. Businesses that scramble to produce documents during due diligence create delays and erode buyer confidence.
The sale process takes 6 to 12 months. During that time, the business still needs to perform. Owners who mentally check out, reduce marketing spend, or defer maintenance decisions during the sale process often find that the business performance deteriorates, giving the buyer grounds to renegotiate the price.
This is not a financial mistake, but it is the one owners mention most often in hindsight. Selling a business you have built over years is an emotional event. Owners who have not thought about what comes next (new venture, retirement, consulting, travel) often experience a period of disorientation. Think about this early. It affects how you negotiate transition terms, non-compete clauses, and post-sale involvement.
Before engaging a broker or adviser, confirm the following are in order:
Monthly management accounts for the last 24 months. Bank accounts reconciled to date. All BAS and IAS lodged and paid. Superannuation current for all employees. Payroll tax (if applicable) lodged and paid. Leave balances accurate and up to date. Chart of accounts structured for clear reporting. Normalised EBITDA schedule prepared with documented add-backs. Related party transactions documented with written agreements. No outstanding ATO correspondence or disputes. Employee contracts current and compliant. All business insurance policies in force. Lease agreements documented and transferable. Customer contracts reviewed for change-of-control provisions.
See our exit readiness scorecard for a self-assessment.
How long does it take to sell a business in Australia?
Typically 6 to 12 months from listing to settlement, plus 12 to 24 months of preparation beforehand. Total timeline from "I want to sell" to "money in the bank" is usually 18 to 36 months.
What multiple can I expect for my business?
Multiples vary by industry, size, and risk profile. Most Australian SMEs sell at 2 to 5 times normalised EBITDA. High-growth, low-risk businesses with recurring revenue can achieve higher multiples. Your M&A adviser can provide industry-specific benchmarks.
Do I need a lawyer for a business sale?
Absolutely. A business lawyer is essential for drafting or reviewing the sale agreement, managing conditions precedent, handling employee transfer provisions, and protecting your interests post-sale. This is not a DIY transaction.
What is an earn-out?
An earn-out is a portion of the sale price that is contingent on the business achieving certain performance targets after settlement. Buyers use earn-outs to reduce risk. Sellers should be cautious about earn-outs because you may no longer control the factors that drive performance once you have exited.
Should I tell my employees I am selling?
Not until the deal is substantially progressed and confidentiality obligations allow it. Premature disclosure creates instability. Key employees who are critical to the transition may be informed earlier under a retention arrangement, but only with appropriate confidentiality protections.
What happens to my employees when I sell?
Under the Fair Work Act, the treatment of employees depends on the sale structure and whether the buyer is considered a "transferring" or "new" employer. Employee entitlements, including accrued leave, may or may not transfer depending on the specifics. This must be addressed in the sale agreement. Get legal advice.
How do I maintain confidentiality during the sale?
Use a business broker to screen enquiries. Require NDAs before sharing any information. Use a code name for the business in marketing materials. Only share detailed financials with genuinely qualified buyers who have demonstrated capacity.
What is a non-compete clause and how long should it last?
A non-compete restricts the seller from starting or working in a competing business for a defined period and geographic area after the sale. Typical periods are 2 to 5 years. The duration and scope are negotiable and should be proportionate. Courts may not enforce unreasonably broad non-competes.
If you are even vaguely considering selling in the next two to three years, start with one action: pull up your latest balance sheet and P&L and ask your accountant to prepare a normalised EBITDA schedule. This single exercise will give you a realistic starting point for what your business might be worth and will surface any clean-up work needed. The earlier you do this, the more time you have to improve the number before you go to market.
Scale Suite is a Sydney-based provider of outsourced finance teams and fractional CFO services for Australian SMEs. We deliver weekly bookkeeping, payroll, BAS/IAS lodgement, cashflow reporting, management accounts, and strategic fractional CFO oversight as a fully embedded team that works inside your business.
CA-qualified, Xero Certified, and registered BAS Agents, we replace fragmented bookkeepers and once-a-year accountants with one responsive finance function at a fraction of the cost of full-time hires. We serve growing businesses across Sydney, Melbourne, Brisbane, and Perth, with packages starting from $1,500 per month and no lock-in contracts.
Learn more about our embedded finance model at scalesuite.com.au/services/finance
Disclaimer: This article provides general awareness information only and does not constitute tax, legal, financial, or professional advice. Business sales involve complex tax (including capital gains), legal, and structural considerations that require qualified professional guidance. Scale Suite Pty Ltd (ABN 16 684 424 771) is a registered BAS Agent, not a tax agent, and does not provide tax advice on business sale transactions. Engage a qualified tax agent, business lawyer, and business broker or M&A adviser before proceeding with any business sale. Liability limited by a scheme approved under professional standards legislation.
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Scale Suite is a Sydney-based provider of outsourced finance and HR services for Australian SMEs. We deliver bookkeeping, financial reporting, payroll processing, fractional CFO support, recruitment, employee onboarding, people and culture support, and fractional HR oversight, all as a fully embedded team that works inside your business.
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