What is a "Seller's Disclosure Statement and Information Request Form"?

 

The “Seller Disclosure Statement and Information Request Form” is a detailed standard form used by Australian business brokerage firms for:

 

1. Collect comprehensive information about the business from the business owner (seller);

2. Ensure that all material facts are fully disclosed by the seller before presenting the business to potential buyers.

3.  

This document has two core purposes:

 

1. Information disclosure: The seller shall formally disclose material matters related to the company for the buyer's information.

2. Data collection: This allows brokers to obtain key information needed to compile marketing materials and information memos (IM).

 

In Australia, business transactions emphasize transparency and due diligence. Business brokers have a legal and moral obligation to present accurate and complete information about the business during the sales process.

 

With this form, agents can:

 

• In-depth understanding of the company's operations

• Identify potential legal, financial, or operational risks

• Prepare accurate and compliant promotional materials and information memos.

• Provide legal protection for brokers and sellers to prevent future disputes.

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This form is also one of the compliance tools that brokers use to comply with the Australian Consumer Act and relevant state regulations.

 

The form typically includes the following:

 

Broker listing information includes the agent's name, agency type (exclusive or open), commission terms, and transaction format (such as WIWO, SAV, etc.).

Company profile includes basic information such as ABN/ACN, corporate structure, ownership, place of business, and years of establishment.

Financial information includes the income statements, balance sheets, and current liabilities and assets lists for the most recent three years.

Legal and compliance matters include business licenses, various permits, insurance, leases, contracts, and intellectual property information.

Employee information: number of employees, employment agreements, applicable industrial awards or enterprise agreements (EBA).

Assets and inventory include equipment lists, existing inventory, leased assets, fixed assets, etc.

Are there any disputes or issues related to legal proceedings, customer complaints, contractual disputes, or compliance issues?

The seller must sign a declaration confirming that the information provided is true, complete, and accurate (to the best of its knowledge).

 

Why is this document important?

 

• Ensure full disclosure to the buyer to reduce the risk of disputes or litigation after the transaction;

• It helps brokers compile authoritative and reliable information memos (IMs);

• Provide evidence to brokers and sellers that full disclosures were made prior to the transaction;

• Assist brokers in complying with legal requirements and avoiding misleading or deceptive conduct (which is a serious offense under Australian consumer law).

• It is an important reference for the buyer when conducting due diligence.

 

Australian Law and Practice Considerations

 

• In business transactions, brokers must ensure that sellers do not conceal important facts that could influence the buyer's decision;

• A complete disclosure statement helps prevent transactions from failing due to information asymmetry;

• Buyers and their advisors typically rely heavily on this disclosure document during the due diligence phase;

• This form is usually accompanied by a list of information requests, such as copies of financial statements, lease agreements, employee lists, and other supporting materials.