Many Chinese and Asian business owners and families enter the Australian market by buying an existing business. A purchase gives you customers, staff and a trading history from day one, but it can also mean inheriting the seller's past problems. Thorough due diligence before you sign is the most effective way to protect yourself as a buyer.
Step one: check whether foreign investment approval is needed
Overseas buyers, including Australian companies controlled by foreign persons, may need approval from the Foreign Investment Review Board (FIRB) before acquiring an Australian business, shares in a company or an interest in land. Whether you must apply depends on who the buyer is, the industry, the deal structure and the value. The foreign investment rules have changed several times in recent years and the Government has announced further reforms, so check the rules that apply at the time before you sign.
Larger acquisitions may also need to be notified to the Australian Competition and Consumer Commission (ACCC). Since 2026, acquisitions that meet the thresholds must be notified and cleared before they can complete.
Due diligence checklist
- Company and ownership: registration details, shareholders and directors, and any security interests registered on the PPSR
- Finance and tax: accounts, tax returns, GST, and whether wages and superannuation have been paid in full
- Key contracts: whether customer and supplier contracts can be assigned, and whether they contain change of control clauses
- Premises lease: the remaining term, options to renew and the landlord's conditions for consenting to an assignment
- Employees: employment contracts, compliance with the relevant Award, and accrued leave entitlements
- Licences and permits: whether industry licences can be transferred to the new owner
- Intellectual property: who owns the trade marks, domain names and website
- Disputes and compliance: any pending litigation, complaints or regulatory investigations
Shares or assets?
Buying shares means taking on the company's past liabilities, so the due diligence needs to go deeper. Buying assets lets you choose which assets and liabilities you take over, but contracts, licences and employees must be transferred one by one. Decide on the structure early and match the scope of due diligence to it.
Extra points for cross-border buyers
- Source of funds: when purchase money is sent from overseas, banks may ask you to explain where the funds came from, so allow time for this
- Buying entity: buying as an individual, through an Australian company or through a trust affects tax, foreign investment approval and any future sale
- Withholding: where the deal involves Australian land or land-rich interests, the buyer may have to withhold part of the price and pay it to the ATO unless an exception applies
- Contract language: if there are English and Chinese versions, state which version prevails
- Day-to-day management: who will run the business and sign documents while the overseas owners are not in Australia
Need help?
We act on business acquisitions across Australia; our property and lease work is limited to Victoria. Before you sign or pay a deposit, book a 30-minute paid consultation with our Mandarin speaking and English speaking lawyers in Melbourne. Contact us on WhatsApp +61 490 369 102 or call +61 3 9602 3988.
This article is general information only and is not legal advice. You should not rely on it for any particular matter. The law may change; for advice on your situation, please book a consultation.
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