How to Prepare Your Business for Sale: Legal Readiness Checklist

The best time to start preparing your business for sale is well before you actually want to sell. A clean, well-organised business attracts more buyers, achieves a better price, and completes faster. A messy business creates discounts, conditions and headaches. Here is a practical legal readiness checklist for owners thinking about an exit.

1. Corporate structure and records

Buyers will look closely at the formal structure of the business and the quality of the corporate records.

• Confirm your group structure is clean (no dormant entities or unnecessary holding companies)
• Update your company constitution and check it remains fit for purpose
• Ensure ASIC records are accurate and current
• Review the share register, including any options, vesting arrangements or convertible securities
• Confirm all share issues, transfers and buybacks have been properly authorised and documented
• Reconstruct any missing minute books or registers

2. Shareholders**'** agreement

If you have one, review it. If you do not, consider whether one should be put in place. Key items to check:

• Does it deal with sale processes, drag-along and tag-along rights?
• Are the exit provisions consistent with your sale plans?
• Are there any consents required from minority shareholders before a sale can proceed?

3. Material contracts

Contracts are often the heart of business value. Buyers want to know they will continue.

• List all material contracts, organised by counterparty
• Identify change-of-control or assignment clauses
• Verify expiry dates and renewal terms
• Confirm contracts are signed by authorised parties
• Identify any contracts that need to be renewed or renegotiated before sale

4. Intellectual property

IP is frequently a key value driver. It also frequently has gaps that need to be addressed.

• Confirm all IP is owned by the entity you are selling (not founders personally, not other group entities)
• Verify trade mark, patent and design registrations are current and properly filed
• Document IP assignments from contractors, consultants and former employees
• Capture any third-party licences that affect the business's IP rights
• Address any IP issues identified in the IP audit

5. Employment

People are often the second-most-important value driver after IP. They are also a common source of friction.

• Confirm all employment contracts are current, signed and aligned with role
• Check that contractor arrangements are properly documented and not at risk of being recharacterised as employment
• Review key person and equity arrangements (employee share schemes, restraint clauses)
• Confirm superannuation, leave and other entitlements are accurately accrued
• Identify any underpayment, unfair dismissal or workplace claims (current or threatened)

6. Financial records

Buyers will want clear, defensible financials. Audit-quality is ideal; well-organised management accounts are the minimum.

• Have the last three years of financial statements reviewed (if not audited)
• Reconcile any unusual items or adjustments
• Document related-party transactions
• Prepare a quality of earnings analysis (or be ready for the buyer to do one)
• Address any tax issues or open ATO correspondence

7. Property and leases

• Confirm leases are current and signed
• Check assignment provisions and required landlord consents
• Identify any lease expiries that fall within the deal timeline
• Address any disputes with landlords

8. Regulatory licences and compliance

• List all licences required to operate the business
• Confirm each is current, in the name of the right entity, and not subject to known issues
• Address any compliance gaps (privacy, AML/CTF, consumer law, industry-specific)
• Ensure the business has met its ongoing reporting and disclosure obligations

9. Litigation and disputes

• Resolve current disputes where possible before going to market
• Document any unresolved matters with clear summaries for the data room
• Identify any threatened claims and assess their materiality

10. Data room readiness

A well-organised data room is a powerful selling tool. It signals quality, accelerates due diligence, and reduces the buyer's negotiating leverage.

• Choose a virtual data room provider
• Organise documents by category (corporate, contracts, IP, employees, etc.)
• Index everything clearly
• Restrict access and permissions appropriately

Common pitfalls

• Leaving preparation until a buyer is at the door, then scrambling
• Failing to address known issues before they become deal points
• Forgetting that personal IP, personal contracts or family arrangements often appear in the data room
• Not engaging legal and tax advisers early enough to optimise structure

How Luma Legal can help

We work with business owners, founders and management teams to prepare for sale, often months or years ahead of an actual transaction. We run pre-sale legal audits, fix identified issues, optimise the structure, and put the business in the best possible position to achieve a clean, premium-priced exit.