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business.gov.au sets out the shape of buy-side diligence: review financial records, business operations and legal documents, and specifically check licences and permits, contracts and leases, outstanding supplier agreements, the status of plant and equipment, assets including intellectual property, inventory, and liabilities including whether debts are owing on assets registered on the Personal Property Securities Register.

On the financial side it recommends independently collecting and checking the information, examining the past three to five years including tax returns, business activity statements, accounts receivable and payable, balance sheets, profit and loss records, cash flow statements and sales records.

The Personal Property Securities Register check is the step most often skipped by first-time buyers and the one most likely to produce an unpleasant surprise, because equipment sitting on the floor may be secured to a financier rather than owned by the seller.

The Australian Government's foreign investment site states that you may need to submit an investment proposal for review if you propose to acquire a substantial interest in an entity or an Australian business, described as generally at least twenty per cent, subject to monetary thresholds.

A direct interest, described as generally at least ten per cent or a position of control, triggers review for an agribusiness subject to monetary thresholds, and for an Australian media business or a national security business regardless of value.

Foreign government investors have additional notification obligations, including where they are starting an Australian business or where an existing Australian business they carry on starts a new and different activity. Thresholds change, so the current figures should be checked on the official site at the time of the deal rather than taken from an adviser's memory.

The perimeter question in a transaction is who is arranging it. Shares and interests in registered schemes are financial products, and dealing in one is a financial service under the Corporations Act, as is giving financial product advice. Carrying on a business of either in this jurisdiction requires a licence covering those services unless an exemption applies. That catches more of the mid-market adviser landscape than people expect, because someone who finds the counterparty, carries the negotiation and is paid on completion has done considerably more than introduce two strangers.

The definition reaches further than most transaction advisers assume, because it is not confined to formal recommendations. A statement of opinion is caught, and so is a report of one, where it is intended to influence a decision about a particular financial product or could reasonably be regarded as intended to do so. In a share sale that can describe a good deal of what gets said to a shareholder about whether to accept an offer. Where the adviser has also weighed that shareholder's own objectives or financial position, or a reasonable person would expect them to have, the advice becomes personal rather than general, which carries further obligations again.

The Act carves out advice given by a lawyer in their professional capacity about matters of law, and advice given by a registered tax agent or BAS agent in the ordinary course of those activities. Business brokers and advisers operating outside those carve-outs should be able to tell you what licence or authorisation they hold. Ask, and verify it on the public registers.

In an Australian share sale the buyer's protection is mostly contractual: warranties about the state of the business, indemnities for specific identified risks, and limits on both. The seller answers with a disclosure letter, which qualifies the warranties by disclosing what is already known. Anything properly disclosed is generally carved out of a warranty claim.

The negotiation that matters is the interaction between the three: how long warranties survive, the minimum claim size, the aggregate cap, and whether any liability is secured by holding back part of the price or by an escrow. Warranty and indemnity insurance is available in the Australian market and is worth considering on larger deals.

Tax and employment are the two areas where a specific indemnity is common, because the amount is quantifiable and the risk is known to sit with the period before completion. An adviser should be sizing those exposures during diligence, not discovering them during drafting.

Owner dependence is the most common. A business where the founder holds the key relationships, the pricing judgement and the supplier goodwill is worth substantially less, and the discovery usually happens during diligence rather than before it. Preparation work in the year before a sale changes the outcome more than negotiation does.

Unrecorded employment liabilities are the second. Award misclassification and unpaid superannuation are findable, quantifiable and will be deducted from the price. Sellers who run a wage compliance check before going to market negotiate from a much better position.

The third is an earn-out whose measurement is not defined. If the buyer controls the accounting, the allocation of overheads and the sales priorities after completion, the earn-out is a hope rather than consideration. Define the measure, the accounting policies and the seller's access to information in the agreement.