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On a small screen, scroll the table sideways to see every column.
| Acquisition component | Funding or review question |
|---|---|
| Goodwill and trading business | Do maintainable earnings support the purchase price and repayments? |
| Equipment and vehicles | Can suitable asset finance fund them, and is existing security released? |
| Freehold property | Does a separate property facility make sense? |
| Stock and receivables | How are they valued and adjusted at settlement? |
| Transaction and transition costs | What cash remains after legal fees, duties and initial operating expenses? |
| Vendor finance | How do seller repayments and security rank alongside other debt? |
Understand the transaction structure
Buying assets and buying shares can create different liabilities and tax consequences. Have advisers review what transfers, what remains with the seller and which consents are needed. Check leases, licences, employee obligations, contracts and registered security where relevant.
business.gov.au recommends reviewing the business's records and risks before committing. The seller's asking price and a lender's valuation are inputs to the decision, not substitutes for that review.
Build the repayment case from verified earnings
Review financial statements, bank activity, tax records and current trading. Question adjustments to the seller's profit figure: an expense may be added back only if it will genuinely disappear under your ownership.
Allow for a market wage for work previously done by the owner, replacement equipment, customer concentration and the transition period. Sales generated by the departing owner may not transfer automatically.
Start from records that can be checked, then identify the changes under your ownership. An owner salary added back to reported profit is only available for debt service if that work genuinely disappears or is already covered elsewhere. Rent, supplier prices and staffing may change at transfer. A forecast based on the seller's best year can overstate the cash you will inherit.
For illustration, assume an advertised earnings figure of $160,000 excludes a $70,000 replacement manager and $20,000 annual equipment spending needed to maintain operations. That leaves $70,000 before acquisition debt and other adjustments. These assumed figures demonstrate why the earnings definition matters; they are not a valuation multiple or an approval benchmark.
Examine customer concentration and the durability of contracts. A large customer may buy because of the departing owner's involvement, and a contract may require consent before transfer. Confirm the position rather than treating all historical sales as automatically continuing.
Distinguish the purchase price from what transfers
The agreement should identify equipment, stock, intellectual property, contracts and other items included, and the treatment of liabilities. Ask advisers to review stock adjustments, employee matters, lease assignment and registered security. Buying shares and buying selected assets create different transaction issues.
business.gov.au's acquisition guide recommends due diligence into financial records, operations and legal obligations before purchase (checked 5 October 2026). Finance approval should not be treated as confirmation that the target business is worth the price or that every transfer issue has been resolved.
Combine finance only where the pieces work together
A purchase may involve owner capital, a term loan, property or equipment finance and negotiated vendor finance. Each provider must understand the other commitments. Security, consent and repayment priority can limit the combinations available.
Invoice finance may support eligible receivables once the business is operating, but it should not be assumed to fund an unrestricted part of the purchase price. Confirm the actual facility and settlement conditions.
A lender may view goodwill, property, equipment and working capital differently. Prepare a breakdown of the price and identify which funding source covers each component. Do not assume a vehicle loan can release unrestricted cash for goodwill, or that an invoice facility can advance against receivables the buyer will not own.
Vendor finance can bridge a negotiated part of the price, but it creates another creditor. Agree repayment dates, security, default terms and any restrictions with advice. A senior lender may need to approve the arrangement, and the combined payments must fit the business. Deferring payment to the seller is not the same as receiving a price reduction.
Have the settlement parties confirm where each payment goes, which existing debts are paid out and what releases or consents are required. Allow for changes in the payout amount as the date moves. Keep buyer contributions available when required rather than assuming every source funds at the same moment.
Plan the first operating month before completion
Identify who invoices work spanning the handover, who collects old debts and which supplier accounts must be opened in the buyer's name. Check deposits, payroll dates and inventory needed immediately. If the seller provides training, specify the scope and timing rather than relying on a general promise to help.
The first-month budget is also a useful negotiation tool. It can expose a transaction that needs a different completion date, stock arrangement or contribution. Resolve that before the full purchase price is committed.
Put an opening cash reserve beside the sale price
For illustration, a $300,000 purchase with $20,000 in transaction costs and adjustments and $30,000 of initial operating cash needs $350,000 before allowing for the buyer's contribution. Those are assumed figures, not standard acquisition costs. List your own costs and identify which the proposed lender will fund.
Check which cash, stock and customer receivables transfer under the sale agreement. A profitable business can still need a cash reserve at handover if the seller keeps earlier receipts while the buyer starts paying wages and suppliers.
Have professional advisers help settle the finance and due-diligence conditions before making an unconditional commitment. If the available package uses every dollar at settlement, consider a different price, contribution or transaction structure before leaving the new business short of operating cash.
Buying out a business partner
Agree the valuation before arranging debt
Identify the valuation date, the information used and whether the price assumes the business is free of debt or includes particular liabilities. Separate cash, stock, equipment, goodwill and owner loan accounts where relevant. The agreed percentage ownership does not by itself explain the amount payable at settlement.
Ask the valuer and accountant to explain adjustments to reported profit, including owner remuneration and one-off items. A valuation based on earnings needs a credible view of the business after the departure. It should not assume the owner's customers or expertise remain without a plan to retain or replace them.
Where owners disagree, agree a process for obtaining and reviewing evidence before negotiating a funding package. A lender's willingness to advance a particular amount is not an independent conclusion that the buyout price is fair.
Budget for the departing owner’s work
List the work the owner performs and decide who will take it over. Include a replacement salary or extra staffing where needed. Their drawings cannot all be assigned to loan repayments if someone still has to manage the venue, deliver the work or win the customers.
For an illustrative business where the exiting owner draws $90,000 a year and replacement management costs $70,000, the apparent $90,000 available for debt service falls to $20,000 before other changes. Those are assumed figures; tax, employment costs and the transaction may change the real calculation.
Review relationships as well as wages. If customers buy because of that owner's involvement, allow for a handover and possible lost revenue. Use the continuing business's cash flow to assess the buyout debt, then test a slower transition.
Make the release part of settlement
List current guarantees, secured facilities, signing authorities, bank access and commercial contracts. Leaving the company does not automatically release a person from a guarantee. Obtain the relevant creditor's written agreement rather than relying on a private promise between owners.
Finalise the borrower, transaction documents, repayment forecast and guarantee releases together. The settlement should achieve the agreed separation as well as pay the price.
For an illustrative $300,000 buyout loan over five years at 8% p.a., monthly reducing-balance repayments are about $6,082.92, with $64,975.10 interest over the term before fees. The assumed rate is not a quote. Include the remaining owner’s income needs and the cost of replacing the seller’s work in the affordability forecast.
Who may fund an acquisition
An acquisition may need a commercial term loan, asset finance, seller finance or several coordinated sources. NAB’s commercial-loan range includes Business Market Loans from $250,000, checked on 10 October 2026. This is an example of a commercial facility to discuss, not confirmation that a particular acquisition qualifies. Ask the lender whether it will fund goodwill, shares, assets and working capital under the proposed structure.
There is no universal buyer-deposit percentage. A price dominated by goodwill leaves less realisable asset security than a property-backed transaction, while the acquired cash flow must also support debt. Ask for a written funding indication after the lender sees verified accounts, the contract, your experience and the security. Do not commit to a settlement date on a generic product maximum.