Contracts, Due Diligence, and Settlement in NDIS Business Sales

The legal and commercial stages of an NDIS business sale involve several critical steps. Understanding this process helps both buyers and sellers navigate the transaction confidently and avoid common pitfalls.

Stage 1: Heads of Agreement

The Heads of Agreement (or Letter of Intent) is a preliminary document that outlines:

• Proposed purchase price and payment structure
• Key terms and conditions of the sale
• Due diligence period and scope
• Confidentiality obligations
• Exclusivity period (if applicable)
• Key milestones and timelines

While typically non-binding on the commercial terms, the confidentiality and exclusivity provisions are usually binding.

Stage 2: Due Diligence Period

The due diligence period allows the buyer to investigate the business thoroughly. In NDIS transactions, this typically covers:

• Financial due diligence — revenue, profitability, receivables, liabilities
• Compliance due diligence — registration, audit status, incident history
• Operational due diligence — systems, processes, staff, participants
• Legal due diligence — contracts, insurance, intellectual property, disputes
• Market due diligence — competitive landscape, demand trends, growth potential

The due diligence period is typically 4–8 weeks, depending on the complexity of the business.

Stage 3: Sale Agreement

Once due diligence is satisfactorily completed, the parties negotiate and execute the formal Sale Agreement. Key provisions include:

• Purchase price and payment terms — lump sum, instalments, earnout
• Assets or shares being transferred — and what is excluded
• Representations and warranties — statements about the business that the seller warrants are true
• Conditions precedent — things that must happen before settlement (e.g., NDIS Commission approval, landlord consent)
• Indemnities — protections against specific risks
• Non-compete and restraint clauses — restricting the seller from competing post-sale
• Transition arrangements — seller support during handover

Stage 4: Pre-Settlement

Between signing and settlement, several steps must be completed:

• Satisfy all conditions precedent
• Notify the NDIS Commission of ownership changes
• Obtain any required consents (landlords, licences, contracts)
• Prepare staff and participant communication plans
• Finalise transition and handover arrangements

Stage 5: Settlement

Settlement is the completion date when:

• The purchase price is paid
• Ownership transfers to the buyer
• Keys, systems access, and operational control are handed over
• Staff and participant communications are executed
• Post-completion obligations commence

Post-Settlement Obligations

Common post-settlement obligations include:

• Seller transition support (typically 30–90 days)
• Working capital adjustments
• Earnout calculations and payments
• Warranty claim periods
• Non-compete period compliance

Key Takeaways

• Understand each stage of the process before entering a transaction
• The Heads of Agreement sets the framework for the entire deal
• Due diligence in NDIS transactions requires sector-specific expertise
• The Sale Agreement should be carefully negotiated with specialist legal advice
• Post-settlement obligations require ongoing attention from both parties

Before settlement, check whether any sale assets are subject to registered security interests — our guide to PPSR searches in NDIS business sales explains which searches to run. Whether you buy assets or shares also depends on the seller's entity; see how business structure affects an NDIS sale.

Need guidance on change of ownership requirements? Our specialists can help you navigate the process.