Welcome to Part 2 of the Sierra Series, Things to Consider When Selling Your Business.

In Part 1, we looked at how to develop a clear strategy for selling your business. Once your strategy is set, preparation becomes critical. Even the best-laid plans can quickly unravel if your records, structures and operations are not in order.

In this part, we focus on preparation - why getting your “house in order” matters, what buyers will typically scrutinise and the practical steps you can take now to reduce risk and protect value.

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Why getting your “house in order” matters

Buyers will almost always conduct financial, legal and operational due diligence before committing to a transaction. If your business appears disorganised or incomplete, this can:

• delay the transaction;
• erode buyer confidence;
• reduce the sale price; and/or
• increase the risk of warranty and indemnity claims post-completion.

A well-prepared business sends a strong signal: lower risk, greater certainty and fewer surprises. It also makes the sale process faster, smoother and more predictable—often translating into a better commercial outcome.

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The upside of being organised

Businesses that are transaction-ready typically benefit from:  

• shorter timeframes and lower advisory costs;
• increased buyer confidence and stronger valuation outcomes; and
• reduced exposure to warranty and indemnity claims.

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What buyers will usually ask for

While due diligence varies from deal to deal, most buyers will expect access to:

• financial records for the previous two years;
• key legal documents (such as material contracts, company registers, licences and registrations, records of disputes and claims); and
• core operational documents (such as policies and procedures).  

Bottom line: buyers want transparency and certainty. The more organised your business is, the stronger your negotiating position.

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Practical steps to get your house in order

This is not about tidying up files at the last minute. It’s about proactively identifying and fixing issues before they become leverage for a buyer. Here’s how:

1. Conduct a preliminary audit

One of the most effective ways to prepare for sale is to conduct a pre-transaction legal audit before buyers start their due diligence.

A legal audit allows you to identify gaps, risks and inconsistencies early - giving you time to address them on your terms, not under transaction pressure.

Sierra Legal regularly assists clients with pre-transaction legal audits for both share and asset sales. These audits typically involve:

• reviewing key contracts and corporate documents;
• conduct relevant searches; and
• providing a high-level report identifying material issues and practical recommendations.

To minimise disruption, audits can be staged over several months, allowing you to address issues progressively while continuing day-to-day operations. For cost certainty, we offer this service on a fixed-fee basis, giving you transparency and predictability from the outset.

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2. Fix the issues early

Identifying issues is only half the job. Before the transaction process formally begins (covered in Part 3 of this Sierra Series), it is critical to act on the audit recommendations.

Common issues we uncover in a legal audit include:

• Outdated or missing company registers, including inconsistencies with ASIC records.
• Unsigned, expired or informal contracts, particularly with key suppliers or customers.
• Missing written agreements, such as customer contracts or employment agreements for founders or key personnel.
• Expired or incorrectly held licences, affecting compliance and continuity.
• Intellectual property (IP) ownership gaps, including unregistered IP or IP held by the wrong entity.
• Residual security interests, with PPSR searches often revealing outdated registrations.
• Overly complex or inefficient corporate structures, including dormant entities.

Addressing these issues early reduces execution risk, avoids last-minute delays and protects value during negotiations.  Moreover, resolution before the sale of any material issues identified in the course of a legal audit should give a buyer less cause to insist on some of the sale proceeds being held back or escrowed for a period after completion of the sale to cover potential warranty or indemnity claims.

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Client success story

We recently advised on the successful merger of Clemenger International Freight with SJ Group.  Before the transaction process commenced, we undertook a pre-transaction legal audit of Clemenger International Freight to identify and resolve key issues early.

"It was fantastic having Sierra Legal’s support throughout the whole journey that began with a comprehensive legal audit of our business a couple of years ago, and then finished with our recent successful merger with SJ Group.  I was always impressed with the high level of legal expertise and experience offered by the team at Sierra Legal, but with the important overlay of always taking a commercial and practical approach.  I also appreciated Sierra Legal’s reasonable and transparent pricing arrangements, and their willingness to work around the clock to meet deadlines and get the transaction completed."

— Michael Clemenger, Managing Director of Clemenger International Freight

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What’s next?

With a clear strategy and your house in order, you are ready to move into the transaction phase.

In Part 3, we’ll run through what is typically involved in a transaction process and how deals usually unfold from start to finish.

Stay tuned.

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