For many business owners, the decision to sell your business marks a defining point in both their professional and personal journey. Yet despite the significance of the moment, many sellers underestimate the role that tax policy and regulatory frameworks play in shaping the outcome of a transaction.
Too often, sellers focus on valuation and buyer interest while assuming that tax and regulation are matters to be handled later. In practice, these settings influence how a deal is structured, how long it takes to complete, which buyers are realistic, and how much value is ultimately retained after tax and transaction costs. As we move into 2026, this complexity has increased, not diminished.
Understanding the policy environment early allows business owners to approach an exit strategically rather than reactively. Those who do so retain greater control, reduce execution risk, and place themselves in a stronger position to achieve a clean and commercially sound outcome.
Why Policy Settings Matter More Than Most Sellers Realise
Policy settings form the foundation upon which every transaction is built. They determine what structures are permissible, what approvals are required, and how value is taxed. In the context of selling your business, this includes capital gains tax legislation, small business concessions, competition law, foreign investment rules, and industry-specific licensing requirements.
These frameworks are not static. Thresholds shift, enforcement priorities evolve, and new regulatory regimes are introduced. Even seemingly modest changes can have material consequences when applied to a live transaction.
Consider two businesses with identical operations and valuations. One completes a sale during a period of favourable concession eligibility and minimal regulatory scrutiny.
The other encounters tightened eligibility rules, extended approval processes, or increased disclosure requirements. Despite achieving similar headline prices, the outcomes for the owners may differ significantly in terms of timing, certainty, and net proceeds.
In practice, policy settings influence:
- Which buyers can realistically transact
- The structure buyers will accept
- The length and complexity of the sale process
- The degree of conditionality in contracts
- The seller’s after-tax outcome
Experienced sellers recognise that these factors must be addressed well before a sale process begins.
The Direct Relationship Between Policy and Sale Proceeds
While policy settings shape the transaction framework, tax policy has the most immediate impact on sale proceeds. Capital gains tax applies to most business exits, but the amount payable depends on ownership structure, holding period, and access to concessions. A strong headline price can be materially diluted if tax outcomes are not managed from the outset.
Regulatory requirements also influence proceeds indirectly through their effect on buyer behaviour. Transactions requiring approvals often involve longer timelines and increased uncertainty.
Buyers may respond by seeking deferred consideration, broader warranties, or pricing adjustments to account for execution risk. In some cases, regulatory complexity can reduce competitive tension by limiting the pool of viable buyers.
The distinction between domestic and foreign buyers illustrates this dynamic. While foreign acquirers may offer strategic value or higher pricing, they may also trigger FIRB approval, extending timelines and increasing risk.
Sellers must assess whether the potential upside justifies these trade-offs and structure the sale process accordingly.
The Tax Framework That Typically Drives Outcomes
Capital Gains Tax in Business Sales
The sale of a business or shares in a business generally gives rise to a capital gains tax event. Importantly, the taxing point is typically the contract date rather than the settlement.
This distinction has implications for financial year planning and cash flow management, particularly where proceeds are paid over time or subject to conditions.
Individuals and trusts may be eligible for the 50% CGT discount where the asset has been held for more than twelve months. While this concession is widely understood in principle, its application in complex ownership structures is frequently misunderstood. Trust distributions, company ownership, and historical restructures can all affect eligibility.
Mistakes at this stage are often irreversible once contracts are signed. Early advice is essential to ensure that the structure supports the intended tax outcome.
Small Business CGT Concessions
For eligible sellers, the small business CGT concessions can materially improve after-tax outcomes. These concessions are powerful but highly technical, and eligibility depends on meeting several cumulative tests.
The concessions include:
- The 15-year exemption
- The active asset reduction
- The retirement exemption
- The roll-over concession
Access depends on factors such as active asset use, ownership duration, and turnover or net asset thresholds. Documentation is critical. In many cases, eligibility hinges on historical facts rather than current intentions.
Common pitfalls include assets held in non-qualifying entities, incomplete records following restructures, or periods where assets were not actively used in the business. These issues often only emerge during due diligence, at which point remediation options are limited.
Deal Structure Is Shaped by Tax Settings
Share Sale vs Asset Sale
The choice between a share sale and an asset sale is one of the most significant decisions in any business exit. For sellers, share sales are often preferred due to simpler tax treatment and greater access to CGT concessions. Buyers, by contrast, often favour asset sales to limit exposure to historical liabilities and obtain depreciation benefits.
This divergence creates a natural negotiation dynamic. In practice, outcomes may involve price adjustments, indemnities, or deferred consideration to bridge the gap between buyer and seller preferences.
Earn-outs, Vendor Finance, and Deferred Consideration
Earn-outs and deferred payments are increasingly common, particularly where valuation expectations differ or future performance is uncertain. These structures can align incentives and defer tax liabilities, but they introduce risk.
Earn-outs depend on future performance under new ownership. Vendor finance exposes the seller to credit risk. Deferred consideration delays certainty. Each requires careful drafting to ensure that commercial objectives are supported by appropriate protections.
Used well, these mechanisms can unlock deals that might otherwise stall. Used poorly, they can undermine outcomes that appear attractive on headline terms.
Regulatory Approvals Can Reshape the Sale Process
ACCC Considerations
Transactions involving competitors or increased market concentration may attract scrutiny from the Australian Competition and Consumer Commission (ACCC). From 2026, proposed changes to the merger control regime are expected to increase the number of transactions subject to review and extend the depth of that review, particularly where acquisitions involve serial buyers or concentrated markets.
In practical terms, this can lengthen transaction timelines and introduce greater uncertainty around completion. Buyers may respond by seeking stronger contractual protections, including conditions precedent, price adjustments, or termination rights if approval is not obtained.
For those selling their business, this can affect deal certainty and, in some cases, valuation. Anticipating ACCC risk early allows sellers to manage buyer expectations, assess alternative buyer pathways, and structure the sale process in a way that maintains momentum and negotiating leverage.
FIRB and Foreign Buyers
Foreign buyers can expand the buyer pool but introduce additional complexity. In some cases, approval from the Foreign Investment Review Board (FIRB) is required. FIRB is the Australian government body responsible for reviewing foreign acquisitions of Australian businesses to ensure they are not contrary to the national interest.
Whether approval is needed depends on the buyer’s nationality, the value of the transaction, and the industry in which the business operates.
FIRB approval can materially affect deal execution. Review processes may extend timelines, influence exclusivity periods, and introduce conditionality into contracts. Sellers must weigh the strategic value of foreign interest against execution risk and ensure that accurate, well-prepared information is available to support a timely and successful review.
Industry-Specific Regulation
In regulated sectors, licensing and consent requirements can materially affect transaction structure and timing. Healthcare, financial services, construction, and education are common examples.
In some cases, a share sale preserves licences and contracts that would otherwise need to be reissued in an asset sale. These considerations often drive structure decisions more than tax alone.
What Timing Means in Practice
Timing a sale is rarely about trying to anticipate changes in tax or regulatory policy. In practice, it is about understanding how timing decisions interact with financial reporting periods, approval pathways, and the realities of buyer diligence.
The contract date determines tax outcomes, not settlement, which means the choice of when to launch a process can affect financial year positioning, cash flow planning, and concession eligibility. At the same time, regulatory approvals, whether from the ACCC, FIRB, or industry bodies, introduce lead times that are largely outside a seller’s control.
Effective planning, therefore, works backwards from a realistic completion date rather than an ideal one. Sellers need to account for diligence depth, negotiation cycles, approval processes, and potential information requests that can slow momentum.
Where these factors are underestimated, transactions are often pushed into suboptimal windows, increasing execution risk and weakening negotiating leverage. In our experience, disciplined timing reduces uncertainty. Over-engineering timing in pursuit of marginal tax or valuation advantages often has the opposite effect.
Managing Policy Change Risk
Policy changes that occur mid-transaction present a real and often underestimated risk. Shifts in tax settings, competition thresholds, or regulatory interpretation can alter a buyer’s risk profile overnight, even where the underlying business has not changed.
In response, buyers may seek to reprice the deal, restructure consideration, or reopen negotiations around timing and conditions. In more extreme cases, policy uncertainty can stall decision-making within investment committees or derail a transaction entirely.
Carefully drafted sale agreements are one of the few tools available to manage this risk. Conditions precedent, regulatory approval clauses, and material adverse change provisions can provide protection, but they must be calibrated with care.
Clauses that are too broad introduce uncertainty and give buyers excessive optionality. Clauses that are too narrow may leave sellers exposed to genuine downside. The objective is not to eliminate risk, but to allocate it clearly, so both parties understand how policy-related changes will be treated and the transaction can continue with confidence.
Designing the Sale Around Net Outcomes
Selling a business is not defined by headline price alone. The true measure of success is the value retained after tax, risk, and time are accounted for.
Tax policy and regulatory frameworks shape every stage of a transaction, from structure and timing to buyer behaviour and certainty. Sellers who engage early, plan strategically, and understand these forces are consistently better positioned to achieve strong outcomes.
At Oasis Partners, we work with owners well before a transaction begins, helping them design an exit that aligns commercial objectives with policy realities. A considered approach reduces friction, preserves value, and delivers clarity at a critical point in the business lifecycle.