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Selling a business is often the biggest financial event of an owner’s life.It’s years of work, risk and late nights, turned into one number.And that number isn’t decided on the day you list.It’s shaped by everything you do in the months and years before.Buyers will look closely.Their accountant will test your figures.Their lender will want evidence.The more prepared you are, the smoother that process tends to be, and the stronger your position when it comes to price and terms.Preparing a business for sale is about getting your financials, tax position and operations in order. That way a buyer can see the value clearly, and you keep as much of the sale proceeds as possible.
Done well, it helps you:
✔ Present reliable, well-supported numbers
✔ Show what the business genuinely earns
✔ Answer buyer questions with confidence
✔ Reduce surprises during due diligence
✔ Plan the tax on the sale ahead of time
✔ Understand what you’ll actually walk away with
At Elev8 Business Advisory & Tax, we help business owners prepare for sale. That runs from tidying up the numbers and normalising earnings through to structuring and tax planning for the exit.
When a buyer looks at your business, they’re not buying your past.
They’re buying future earning capacity.
That includes:
Good preparation helps you answer the questions a buyer will ask:
Buyers pay for what they can verify.
A strong business with messy records can be harder to sell, and harder to price, than a smaller business with clean, well-supported numbers.
And the sale price isn’t the same as what ends up in your pocket once you allow for:
Knowing that number early changes how you negotiate.
Many owners focus on one figure: what the business is worth.
It matters. But it’s only part of the picture.
What Owners Often Focus On
✔ Asking price
✔ Last year’s sales
✔ Reported profit
What a Well-Prepared Sale Also Covers
✔ Clean, reconciled financials
✔ Normalised (maintainable) earnings
✔ BAS, tax and super lodged and paid
✔ Working capital requirements
✔ Owner dependency
✔ Sale structure
✔ Tax on the sale
✔ Net proceeds after tax and costs
The goal isn’t just to find a buyer.
The real question is: Can a buyer clearly see, and trust, the value you’ve built?
How the sale is structured affects tax, risk and what the buyer is prepared to pay.
It’s worth understanding early.
You Sell Selected Assets
Examples may include:
You typically keep your existing entity, along with its history and any remaining obligations.
Buyers often prefer this structure because they start fresh.
For you, it means working through employee entitlements, lease assignments and GST treatment. You’ll also need to wind up or repurpose the entity afterwards.
Assets go with it.
Contracts go with it.
History goes with it.
Only ownership changes.
Buyers will usually want deeper due diligence, and often warranties and indemnities covering past tax and employee obligations.
This makes clean records and up-to-date compliance even more important.
The right structure depends on your entity, your tax position and what the buyer is looking for. Getting advice before heads of agreement are signed gives you the most room to move.
The scope depends on the size of the business, your timeframe and your goals.
Typical focus areas include:
We make sure your records tell a clear, accurate story:
A buyer’s accountant will test everything. Better that we find it first.
Reported profit usually needs adjusting to show what the business really earns.
Examples include:
Every adjustment needs to be supported. Well-documented add-backs build buyer confidence, while unsupported ones tend to get pushed back on.
Buyers and lenders want to see obligations under control:
Clean compliance removes a common reason for price reductions or extra contract protections.
We help you understand:
This is often where settlement adjustments are negotiated.
If the business relies heavily on you, a buyer sees risk.
It’s worth looking at:
The less the business depends on you, the more it’s generally worth to someone else.
This is where early planning can make a real difference.
Depending on your circumstances, it may include:
A preparation review isn’t a formal valuation.
But it should help answer:
What is a realistic price, and what will I actually walk away with?
We often model:
So you can negotiate knowing your numbers.
For many owners, capital gains tax is the biggest cost of selling.
The small business CGT concessions can reduce that gain significantly, and in some cases remove it entirely.
But they aren’t automatic.
Each one has conditions, and most are tested at the time of the sale or over the years leading up to it.
That’s why they need to be looked at well before a buyer is on the scene.
Before any concession applies, you need to pass the basic conditions.
1. You’re a small business, or you pass the MNAV test
You need to meet one of these:
✔ Small business entity test: aggregated turnover under $2 million
✔ Maximum Net Asset Value (MNAV) test: net CGT assets of $6 million or less, just before the sale
2. The asset is an active asset
The asset must be used, or held ready for use, in carrying on a business.
Assets mainly used to earn rent, such as an investment property leased to an unrelated party, generally don’t qualify.
3. Extra conditions if you’re selling shares or units
If the sale is of shares in a company or units in a trust, further tests apply:
Share sales need particular care. Small details in ownership can make a big difference.
The MNAV Test: Where Most Owners Get Caught
The $6 million limit sounds simple. It isn’t always.
It’s not just the business’s assets
The test counts the net value of CGT assets held by:
That can bring in your spouse’s business, your family trust, your investment company and property held in other names.
It uses market value, not book value
Goodwill that isn’t on your balance sheet still counts.
So does property that’s gone up in value since you bought it.
What’s included
✔ Business assets, including goodwill
✔ Investment properties
✔ Shares and investments
✔ Assets held in connected entities
What’s generally excluded
✕ Personal-use assets, such as your car or household items
✕ Your home (unless partly used to produce income)
✕ Superannuation
✕ Life insurance policies
Liabilities
Liabilities related to the counted assets reduce the net value. That includes loans, provisions for annual leave and long service leave, and certain tax liabilities.
Timing matters
The test is applied just before the sale. A property revaluation, a spouse’s business growing or a new investment can push you over without you noticing.
Knowing where you sit early gives you time to plan.
If you pass the basic conditions, four concessions may be available. They can often be used together.
1. 15-Year Exemption
The entire capital gain is disregarded.
Generally requires:
For companies and trusts, there must have been a significant individual for at least 15 years in total.
Where this applies, it’s usually the first concession considered, and the others aren’t needed.
2. 50% Active Asset Reduction
The capital gain is reduced by 50%.
There are no extra conditions beyond the basic ones.
3. Retirement Exemption
Up to $500,000 of capital gains can be disregarded. This is a lifetime limit per individual.
4. Small Business Rollover
The gain can be deferred, not removed, if you acquire a replacement active asset or spend on improving an existing one.
This generally needs to happen between one year before and two years after the sale.
If the replacement doesn’t happen, or the new asset stops being active, the deferred gain may come back into tax.
How They Work Together
The order matters.
A common sequence looks like:
Used well, the combination can reduce a large gain to a small amount, or to nil.
Super Opportunities
Proceeds that qualify under the 15-year exemption or the retirement exemption may be contributed to super under the CGT cap.
This cap is separate from the usual non-concessional contribution cap. For many owners, it’s a valuable way to move sale proceeds into a retirement setting.
Timing and paperwork rules apply, so this should be planned alongside the sale.
What’s Changing From 1 July 2027
The general 50% CGT discount for individuals, trusts and partnerships is being replaced with cost base indexation and a 30% minimum tax on capital gains, for gains from 1 July 2027.
The four small business CGT concessions remain.
The Government has also announced that the turnover threshold for the 50% active asset reduction will increase from $2 million to $10 million from 1 July 2027. The other three concessions keep the existing $2 million turnover test.
The $6 million MNAV test hasn’t changed. It still applies to all four concessions, and the limit isn’t indexed for inflation. As asset values rise over time, more owners may find themselves close to it, so it’s worth checking where you sit.
If you’re planning a sale in the next few years, how these rules interact is worth modelling now.
The Takeaway
The concessions reward planning.
Structure, ownership, how long you’ve held the asset, how it’s been used and what else sits in your family group all affect the outcome.
These things are much easier to shape years before a sale than weeks before settlement.
Things Buyers Will Notice
It’s worth reviewing these before going to market:
None of these necessarily stops a sale.
But addressing them early can improve:
What Sale Preparation Is — And Is Not
It Is
✔ Financial review and clean-up
✔ Earnings normalisation
✔ Tax and structuring advice
✔ Negotiation support
It Is Not
✕ Statutory audit
✕ Guarantee of sale price
✕ Legal advice
✕ Formal valuation (unless agreed)
✕ Business broking
A good sale involves the right team: your accountant, lawyer, broker and financial adviser working together.
When to Start
Ideally, two to three years before you plan to sell.
That gives you time to clean up the numbers, build a track record, reduce owner dependency and position your structure for the concessions available.
If your timeframe is shorter, there’s still plenty that can be done. It just becomes more important to start now.
Support Beyond Settlement
A sale should work for you at settlement and after it.
Support may include:
If you’re thinking about selling in the next few years, even loosely, it’s worth having a conversation early. It’s usually the most valuable time to look at it.
Happy to talk it through.
This article is general information only and doesn’t take into account your personal circumstances. Tax outcomes on the sale of a business depend on your specific situation. Please seek professional advice before making any decisions.