Selling your share of a business — whether it’s half a partnership or a stake in a company — is a different transaction to selling the whole business. Your pool of buyers is smaller, the price rules may already be written, and the person across the table is usually someone you’ve worked beside for years. Here’s how it works.
1. Start with the agreement you already signed
Before anything else, read your shareholders agreement, partnership agreement or company constitution. It likely controls the whole process: pre-emptive rights (you must offer your share to co-owners first), how the price is set, transfer restrictions, and exit mechanisms. If the documents are silent — or were never done — the sale becomes a negotiation from scratch, and the Corporations Act or partnership law fills the gaps.
2. Who can buy your share
Realistically three buyers: your co-owners (the most common outcome, and usually required first by pre-emptive rights); the company itself through a share buy-back; or an outside buyer — though few outsiders want a minority stake in a private business, and your co-owners’ consent is usually needed. In practice, most share sales are negotiated with the people already at the table.
3. What a partial interest is worth
Half a business is not always worth half the business’s value. A minority stake without control often attracts a minority discount; a 50% stake in a deadlocked structure has its own complications. The agreement may prescribe a valuation formula — if not, engage an independent accredited valuer both sides accept, and agree in advance to be bound by the range. Our valuation guide covers the methods underneath.
4. Negotiating with people you know
The hardest part is rarely the numbers — it’s that you’re negotiating with a friend, a sibling, or a partner of twenty years. Take the heat out early: an independent valuation both sides accept, separate advisers for each party, and a written timeline. Focus the negotiation on terms — payment schedule, handover, restraint — rather than re-litigating the price the valuer set.
5. The paperwork
A share (or partnership interest) sale agreement drawn by a lawyer; formal release from any personal guarantees you’ve given for the business’s lease, loans or suppliers — this one is commonly forgotten and painfully expensive; resignation as director and removal from bank authorities; and updates to ASIC, the partnership registration and insurances. If you’re staying connected commercially, agree the restraint terms explicitly.
6. Tax when selling a share
Selling a share or partnership interest is a CGT event. Depending on your circumstances and the company’s assets, the small business CGT concessions can apply to shares and interests too — but the eligibility tests are stricter and turn on detail, so get advice from a registered tax agent before agreeing terms.
7. When owners can’t agree
If negotiations stall, escalate deliberately: mediation first (cheap, fast, preserves the relationship); then the mechanisms in your agreement, such as compulsory buy-out or auction clauses; and only then legal remedies. Courts can order buy-outs or winding-up in deadlock and oppression cases — but almost everyone is poorer for getting there. A good adviser earns their fee many times over in these situations.
Common questions
Start with your shareholders or partnership agreement — it usually requires offering your share to co-owners first and may set the price mechanism. Then: independent valuation, negotiated terms, a lawyer-drawn sale agreement, release from personal guarantees, and tax advice on the CGT treatment.
Not necessarily. Minority stakes often attract a discount for lack of control, and even 50% stakes can be complicated by deadlock. An independent valuation of the partial interest — not just the whole business — is the defensible starting point.
Usually yes, unless your agreement contains a compulsory buy-out or exit mechanism. If co-owners won't buy and won't consent to an outside buyer, the path runs through mediation, the agreement's dispute clauses, and ultimately court remedies — which is why exit mechanisms belong in every shareholders agreement.
This guide is general information only and does not take account of your personal circumstances. It is not financial, tax or legal advice. Speak to a qualified adviser before acting.