Buying a Business with a Partner in Australia: What to Get Right Before You Sign

Co-buying a business — where two people jointly purchase a business, share the acquisition cost, and split ownership — is one of the more common entry strategies for Australian professionals moving into small business ownership. One brings capital; the other brings operational experience. Or both bring capital and split the running of the business. The logic is sound. What goes wrong, almost always, isn't the business. It's the arrangement between the two buyers.

Getting the structure, the equity split, and the exit provisions right before you settle isn't optional. It's the work that determines whether a co-owned business strengthens a relationship or ends one.

Why People Co-Buy Businesses in Australia

The most common driver is capital. A plumbing business in South East Queensland priced at $600,000 might require $180,000 to $220,000 in equity — achievable for one buyer, but more comfortable for two. Landscaping, HVAC, and electrical businesses at similar price points often sit just above what a single corporate buyer wants to deploy without outside support.

The second driver is complementary skills. One buyer brings the financial rigour and management experience from a corporate career; the other brings trade knowledge, operational background, or an existing relationship in the industry. Done well, it's a genuine division of labour rather than two people doing half a job each.

Rule of thumb: If you need a partner to afford the business, that's fine. If you need a partner because you lack the skills to run it, make sure that dependency is written down — not assumed.

What Entity Structure Works for Co-Buyers

In Australia, co-buying a business through a simple partnership — two names on the contract — is almost never the right approach. A legal partnership creates joint and several liability, meaning each partner is fully responsible for 100% of the business's obligations regardless of their ownership percentage. It's also inflexible if one partner needs to exit.

Most co-buyers use a company (Pty Ltd) with each person holding shares, or a discretionary trust with a corporate trustee that both parties co-own. The company structure is the most common for its simplicity: each shareholder holds a defined percentage, the shareholder agreement governs decisions and disputes, and the structure can accommodate future ownership changes without restructuring the whole arrangement.

If you're weighing up the options in detail, the trust structure for the acquisition article covers the trade-offs between company and trust ownership in an acquisition context.

Rule of thumb: "Buying it as partners" almost always means co-owning a company. An actual legal partnership structure is a specific, less-favoured legal form that most acquisition accountants will steer you away from.

How to Split the Equity

Fifty-fifty sounds fair. In practice, it creates one structural problem: every contested decision is a tie. Two shareholders with 50% each have no clear decision-making authority, which becomes a real issue in a fast-moving trades business — when a key staff member quits, a large tender needs submitting, or a price increase needs to go through immediately.

The options for handling this:

A small asymmetry — 51/49 or 60/40 — gives one partner clear decision-making authority while still reflecting the other partner's meaningful stake.
Defined operational authority in the shareholder agreement — one partner has day-to-day decision rights up to a certain dollar threshold; anything above requires both to agree.
A casting vote provision for the chairperson of the board, which in a two-person company is whoever you designate.

Equity split should also reflect capital contributed, operational role, and risk taken on. If one partner is leaving their corporate salary to run the business full-time and the other is staying employed elsewhere, that asymmetry in risk and contribution should probably show up somewhere in the structure — whether in equity, salary, or both.

Rule of thumb: Don't default to 50/50 because it seems fair. Think about who runs the business day-to-day, who contributed more capital, and who you want making the final call when you disagree.

How Bank Finance Works with Two Co-Buyers

Banks generally welcome two co-borrowers because it reduces concentration risk. Both parties will need to provide personal financials — tax returns, balance sheets, a statement of assets and liabilities — and both will almost certainly be required to sign a personal guarantee. The bank doesn't particularly care about your internal equity split; they care that two people are on the hook.

What banks scrutinise is combined serviceability. If both buyers are still in their corporate roles at the time of application — common in the early stages of a search — the bank will assess both salaries against existing commitments including mortgages, investment property loans, and other business debts.

A finance broker I spoke to last month told me about a deal that almost fell over — not because the combined income was insufficient, but because one partner had a large offset account on an investment property that the bank initially counted as additional debt rather than an asset. The application had to be restructured and the pre-approval process restarted. Worth getting your full financial picture sorted and a pre-approval in place before you enter exclusivity.

For the full picture on bank finance for buying a business — including what the major Australian banks look for when assessing an acquisition loan — that article covers the lending criteria in detail.

Rule of thumb: Both co-buyers should expect to sign personal guarantees and disclose their full financial position. The stronger financial profile doesn't protect the weaker one; the bank assesses the combined picture and lends accordingly.

What to Put in a Co-Buyer Agreement

A shareholder agreement (sometimes called a co-owner agreement) is not optional when two people jointly own a business. It is the document that governs what happens in every scenario neither of you wants to think about. The key provisions:

Decision-making thresholds. Which decisions require unanimous consent — selling the business, taking on significant debt, acquiring property — versus which the operating partner can make alone.
Capital contributions. What happens if the business needs more equity and one partner can or won't contribute equally? Does the contributing partner's share increase? Is a shareholder loan created?
Salary and drawings. If one partner works full-time in the business and the other doesn't, the working partner's market salary needs to be agreed and documented before it becomes a point of resentment. (It will become a point of resentment if it isn't.)
Dispute resolution. Mediation first, then arbitration. It sounds like overkill until you're in a dispute at 11pm over whether to renew a major contract, and you realise you have no agreed process for resolving it.
Non-compete and restraint provisions. If one partner exits, can they compete? Can they poach staff or clients?

This is Module 6 territory — deal structure and financing — and it's covered in depth in Module 6 of the Playbook.

Want a structured comparison of your deal structure options before you commit? The Deal Structure Comparison Framework walks through the key variables in a co-ownership context — free to download.

Rule of thumb: The shareholder agreement costs $3,000 to $6,000 to have drafted properly. That's the cheapest insurance you will ever buy on a $300,000 to $600,000 investment.

Exit Provisions: The Buy-Sell Clause

The buy-sell clause is the exit mechanism in your shareholder agreement, and it's the provision most co-buyers skip until a lawyer insists. It defines what happens when one partner wants out — before you're in a situation where one of you wants to sell and the other doesn't.

The cleanest version is a shotgun clause: one partner names a price for the whole business; the other must either buy at that price or sell their own shares at the same price. It forces fair pricing because the person naming the price doesn't know which side of the transaction they'll end up on.

Other common exit mechanisms:

Right of first refusal. If one partner wants to sell their shares, the other gets first option at the same price.
Drag-along rights. If both partners want to sell to a third party, neither can block the sale.
Tag-along rights. If one partner sells to a third party, the other can require the same buyer to purchase their shares on identical terms.

Life insurance is often structured alongside a buy-sell clause to fund a buyout in the event of death or permanent incapacity. Without it, the surviving partner may be forced to buy out an estate at a price they can't finance quickly.

Rule of thumb: Design your exit mechanism before you need it. The shotgun clause is uncomfortable to negotiate because it requires both parties to price the business honestly — which is exactly why it works.

Risks That Don't Make It Into the Brochure

Asymmetric commitment. One partner working in the business six days a week; the other checking in on Fridays and drawing the same profit share. I watched this play out with two friends who co-bought a cleaning business in Brisbane — the operational partner was burning out within twelve months, and the passive partner genuinely couldn't understand why that was a problem. They sorted it eventually, but not without a period of genuine strain. Define the roles and the compensation attached to them before you settle.

Financial entanglement. Your co-buyer's financial health is no longer entirely their private business. If they take on personal debt, have a marriage breakdown, or get sued, it can affect the business. You're not just assessing the business in due diligence — you're assessing your partner's financial stability too.

Decision paralysis in a fast-moving business. A staff member in your electrical business resigns on a Tuesday. You need to hire quickly or lose contracts. If every decision above $5,000 requires both parties' approval, and one partner is in a board meeting in Sydney, the business suffers. Define operational authority clearly.

The financing options article covers the full mix — including how vendor finance can sometimes reduce the equity required upfront, which in turn might reduce your reliance on a co-buyer altogether.

FAQ

Do both co-buyers need to hold trade licences in a trades business?

No. In most Australian states, a trade licence is held by an individual qualified tradesperson. The operating company typically needs a contractor's licence, but both shareholders don't need to be licensed personally. Check with your state's licencing authority for the specific trade involved.

Can one partner buy the other out after settlement?

Yes. Your buy-sell clause is the primary mechanism. Banks generally require the associated acquisition loan to be refinanced under the remaining owner's name if ownership changes materially. Budget for refinancing costs and allow for a valuation to determine the buyout price.

What if one co-buyer has a weaker financial profile?

The bank assesses the combined application. A weaker financial position in one partner can affect the overall loan terms or require the stronger partner to carry more of the guarantee exposure. Discuss this with a finance broker before you commit to a co-buyer arrangement — not after.

Is 50/50 ever the right structure?

It can work if your shareholder agreement includes a clear casting vote or dispute resolution mechanism, and if both partners have equal financial exposure and operational involvement. Without that infrastructure, 50/50 often means two people waiting for the other to blink.

The Leveraged Worker newsletter covers deal structure, financing, and acquisition lessons from the field — including co-ownership arrangements that have worked and some that haven't. Subscribe at thatdeal.com.au or browse more on the blog.

For the full framework on deal structure and financing, Module 6 of the Playbook is where this comes together.