What’s Included When You Buy a Business: Stock, Handover and More

Most buyers spend weeks on the headline price and barely 10 minutes on what they’re getting. That’s actually backwards. Two businesses with the same asking price can be very different deals once you look at the specifics: what’s included, what’s not and what happens in the first few months after settlement.

Listings do not always outline these details, which is why a buyer’s advocate in Melbourne locals rely on is worth talking to. They know the questions to ask before a seller drafts their contract, while you still hold some bargaining power. Here are the essentials people often forget when they’re planning to buy a business.

Stock Is Almost Always Extra

In Australian business sales, the asking price is typically quoted as “plus stock at value”. That means the buyer pays for inventory on top, based on a figure decided on or near settlement day.

Discuss and agree on the rules early: who counts the stock, how it is valued and what happens to old, slow-moving or damaged items. You shouldn’t have to pay full price for expired or perishable stock. Set a sensible stock level in the contract, too. A restaurant with a half-empty freezer is a significantly different proposition from one with a full freezer.

Check Who Owns All the Equipment

A business sale also means you’ll get an equipment list, which is what many prospective buyers stick to. However, it doesn’t prove the seller owns everything on the list. The cafe might own the coffee machine, while the oven might still be under finance, and the drink fridge might belong to a supplier.

Request a written equipment schedule and check each item. You can even search the Personal Property Securities Register to see if a lender has claims over assets.

Ask about the business’s service records and warranties as well, and whether the warranties will transfer over to you. No matter how impressive a fit-out looks, an old exhaust system or compressor can cost thousands to replace before your business is even up and running.

Look Beyond the Physical Assets

Some of the most valuable assets of a business can’t be touched. The social media accounts, phone numbers, domains, customer lists, supplier accounts, booking systems, software licences and kitchen recipes are all important. If the contract doesn’t list them, you might just end up owning a shop with no way to reach its customers. Make sure everything transfers upon settlement, including logins and ownership, and that the business name is covered.

Keep Staff and Customer Liabilities in Mind

Customer deposits, staff leave balances, gift vouchers and loyalty points are obligations that can transfer. If a staff member has an outstanding leave balance or the seller has taken deposits for future bookings, someone has to honour it.

Agree upfront on how they’ll handle and adjust each obligation at settlement, and make sure your accountant checks all the numbers. Whether employee entitlements change hands depends on how the deal gets structured, so seek credible advice and confirm which staff members are staying and on what terms.

Negotiate the Handover Smartly

In many cases, a handover comes with a casual statement, like “The seller will assist you for the first few weeks”, but make sure to pin everything down. Ask how many weeks they’ll provide assistance for, how many hours per week, and who pays for it. Also clarify what the seller will be training you on, such as key customers, processing systems, ordering or supplier introductions. Those introductions can be more valuable than anything you see on the equipment list.

Consider a restraint of trade clause, too. It basically stops the seller from opening a rival business nearby for a set period. These clauses have to be reasonable in length and area to hold up, so it’s best if your solicitor drafts them.

Don’t Forget About the Lease and Licences

A business can be worth very little if the lease doesn’t transfer. Before settlement, check the remaining term, any required landlord consent and any renewal options. You may also need to reapply for permits and licences, such as liquor and food licences, in your name. Confirm what’s required before you sign anywhere.

Final Thoughts

As the buyer, it’s normal to focus only on the selling price. But the terms shape how well your first year can go. Get the stock, intangible assets, liabilities, equipment and handover down in writing before you sign. Consult a reliable buyer’s advocate who can negotiate these terms and work alongside your accountant and solicitor through to settlement.