Premises and Lease Due Diligence When Buying an Accounting Practice
Premises and Lease Due Diligence tests whether an accounting practice can continue from settlement at a location, cost and level of commitment that fit your ownership plan.
An office can feel reassuringly familiar: clients know where to find it, staff have their routines, and the vendor has worked there for years. As the buyer, however, you need to understand whether that continuity will be available to you, and what it will cost. The rent figure in the sale information is only the beginning of the story.
For Australian buyers, the business.gov.au acquisition guide identifies lease transfer as a due-diligence issue. Stage 5 is where you establish whether the documents support your intended occupancy arrangement. Your solicitor should also determine which lease law applies; an accounting office should not automatically be treated as a retail tenancy.
The short answer
Establish who owns or leases the premises and what you will acquire.
Review the lease, variations, occupancy costs and remaining commitments.
Confirm the transfer or new-lease process, required consents and settlement dependencies.
Assess guarantees, security and make-good obligations separately from rent.
Test relocation plans against client access, staff retention and service continuity.
What should Premises and Lease Due Diligence cover?
The signed lease, variations and correspondence show what has actually been agreed. Comparing them with rent invoices and the vendor’s explanation can reveal differences that matter under your ownership, such as an approaching rent review or option deadline.
The review covers the tenant entity, expiry and options, permitted use, access and facilities, transfer provisions, rent and reviews, security, guarantees, repairs and end-of-lease requirements.
Your solicitor can interpret these provisions and identify missing approvals or unresolved breaches. You should explain how you intend to use the space: a lease that suited the vendor’s team may raise different questions if you plan to expand or share the office.
Is the property leased, owned or held by a related party?
Buying the practice does not necessarily mean buying its building. The vendor may own the office through another entity while the practice pays rent. You need to know whether the proposal includes a property purchase, a new lease or a move elsewhere. Each creates a different commitment.
Related-party arrangements deserve a closer look. If the vendor has charged unusually low rent, that may say little about your future cost. You should establish the terms available to you before using historical rent in your forecast. A property purchase needs a separate legal and property review.
This is where the practice financial information and the occupancy documents need to tell a consistent story. Your operating forecast should reflect the arrangement you can support, while any property purchase and its funding remain separately identifiable.
Can the occupancy arrangement continue at settlement?
Continuity at settlement depends on the proposed arrangement being ready when you need it. You may require an assignment of the existing lease, a new lease or another agreed solution. An asset purchase and a purchase of the tenant company can raise different questions, so your solicitor should consider the structure alongside the lease wording and consent requirements.
The NSW Small Business Commissioner’s lease-transfer guidance explains assignment in its NSW retail-leasing context. It illustrates why the paperwork and consent process deserve attention, but it does not establish the rules for every Australian accounting office. The jurisdiction, premises classification and agreement all matter.
The practical questions include who approaches the landlord, what information and fees are required, who signs, and what happens if the proposed arrangement is delayed or unavailable.
These questions belong in the acquisition timetable while there is room to respond. An encouraging landlord discussion may leave consent or documents unresolved. Your solicitor can explain what evidence is needed and address settlement dependencies, rather than leaving an important occupancy question for the final days.
What is the full occupancy cost?
Monthly rent may be only part of the occupancy cost. Outgoings, utilities, insurance responsibilities, maintenance and parking can affect the budget. Comparing invoices with the agreement helps establish current costs and whether an incentive or temporary discount makes them look lower than the ongoing commitment.
Running costs differ from the cash needed to get established. Security deposits or bank guarantees, legal costs, furniture, fit-out and connections may require funds before the practice earns its first dollar under your ownership. A separate upfront cost schedule makes these requirements visible. Your advisers can explain their treatment, including a consistent GST basis.
Which obligations could outlast your preferred plan?
A longer lease can offer welcome stability, especially while clients and staff adjust to new ownership. It can also become a constraint if you intend to combine offices soon after settlement. Moving the team does not, by itself, establish that the existing rent and other obligations have ended. Your solicitor should explain the exit, assignment and subletting provisions that could affect your plan.
The less visible commitments warrant attention too. You need to understand who will provide guarantees or security, who owns the fit-out and what condition the premises must be left in. Where make-good work could be substantial, a practical cost assessment can help you budget. The security deposit should not be assumed to cap every liability; your solicitor should explain the exposure under the documents.
Will relocation affect the practice you are buying?
The business.gov.au location guide highlights access, layout, facilities and cost.
For an accounting practice, these considerations become quite personal: whether clients can park nearby, whether confidential meetings have a private space, and whether the team has reliable connectivity and secure records storage.
You may see an opportunity to reduce rent by combining offices or operating remotely. Before relying on that saving, it is worth understanding how the change would feel to the people who keep the practice running. A longer commute may affect a key employee, while some clients may value the familiar local office. Discussions should follow an appropriate process agreed with the vendor.
Your staff-structure review can help identify which roles would be affected. The forecast should also allow for overlapping rent, moving time, systems setup and reduced capacity during the change. Potential savings become more credible when the practical steps and costs required to achieve them are understood.
An illustrative relocation decision
Consider a hypothetical buyer who plans to combine two offices six months after settlement. The acquired practice’s lease has another two years remaining, but the forecast removes its rent from month seven. The idea may be commercially attractive; the missing piece is a workable, documented way to deal with the existing commitment.
Suppose the review also reveals that the receiving office needs another meeting room and two employees face a longer commute. The buyer can now assess whether the saving justifies the overlap costs, alterations and transition risks. This hypothetical example does not determine legal liability or recommend a structure; actual outcomes depend on the documents and circumstances.
Frequently asked questions
Does buying the practice give me the right to occupy its office?
Not necessarily. The sale and occupancy arrangements are separate questions. Your solicitor should confirm what the purchase includes and which documents or consents are required for the buying entity to occupy the office.
Does retail tenancy law apply to every accounting office?
The answer depends on the jurisdiction, premises and applicable rules. Your solicitor should determine the relevant framework rather than assuming that every professional office falls within retail tenancy legislation.
Can I forecast rent savings from an immediate move?
Only where the assumption is supported. Continuing obligations, exit arrangements, overlap costs and the effect on clients and staff can change both the timing and size of any saving.
Should I tell my finance adviser about premises findings?
Yes, if they materially change ongoing costs, upfront cash, security requirements, settlement timing or the transaction structure. Your finance adviser can then assess the revised proposal using the current information.
Does the occupancy plan support the acquisition?
A suitable office supports the acquisition when the right to occupy, the costs and the transition plan all fit together. Before proceeding, you should be able to explain what has been verified and how each material unresolved issue will be addressed. That gives the premises a clear place in your purchase assumptions, rather than treating them as background scenery.
Considering Buying an Accounting Practice?
Fairlane Finance can help you understand how premises costs and transition findings affect your acquisition funding pathway.
General information only. This article does not constitute financial, credit, legal, tax, accounting, compliance or valuation advice. Finance is subject to lender approval, eligibility criteria, terms, fees and conditions. Consider obtaining independent professional advice for your circumstances before acting.
