Budget Changes, M&A and the Ownership Review Window

The 2026 to 2027 Federal Budget has created a new planning horizon for private business owners, founders and investors. While much of the public discussion has focused on housing, negative gearing and cost of living measures, one of the most important business implications sits in mergers and acquisitions.

From 1 July 2027, the Government proposes to replace the existing 50 per cent CGT discount with an indexation model, with a minimum 30 per cent tax rate applying to real capital gains accruing from that date. Transitional rules are expected to apply for assets held before 1 July 2027 and sold after that date. (Australian Government Budget)

For business owners, that date matters.

It does not mean every owner should sell. It does mean many owners will review their position. For those already thinking about succession, external investment, partial sell down, merger, acquisition or management transition, the period to 30 June 2027 is likely to become a natural window for strategic review.

The Budget may accelerate ownership conversations

Tax should rarely be the only reason to undertake a transaction. A good deal still needs the right buyer, the right structure, the right valuation and the right long term outcome.

However, tax settings do influence timing.

For founder led businesses, family owned companies, professional services firms and private groups, the proposed CGT changes may bring forward conversations that were otherwise sitting in the background. Owners may ask whether they should sell before 30 June 2027, restructure before the new rules apply, bring in external capital, transfer ownership to the next generation, or hold for the longer term and accept the new tax settings.

The answer will be different for every business. What is clear is that these decisions take time.

A well run transaction is rarely completed quickly. Before a business is ready for market, owners usually need to appoint advisers, prepare financial information, clean up working capital, review contracts, resolve shareholder issues, assess tax structuring, prepare management information and understand the risks a buyer will diligence. In many cases, owners also need time to consider whether they want a full exit, partial sale, merger, internal succession or a staged transition.

For anyone considering a transaction before 30 June 2027, the practical message is simple: start early.

Insurance should be part of deal planning

Insurance is often considered too late in a transaction. It should be part of the planning process from the beginning.

A sale, merger or restructure can change the risk profile of a business overnight. It can change who owns the assets, who employs the staff, who carries historical liabilities, who is responsible for claims, and whether existing policies still respond as intended.

Key insurance issues to consider include:

• Review of existing policies
  Before any transaction, the business should review its current insurance program. This includes named insured entities, subsidiaries, business descriptions, policy limits, deductibles, exclusions, policy assignment clauses, change of control provisions and any notification obligations.
• Directors and officers liability
  A transaction can increase scrutiny on directors and senior management. Boards should consider whether existing D&O limits remain appropriate and whether run off cover is required for outgoing directors.
• Management liability and employment practices liability
  Changes in ownership can lead to employment claims, restructuring risk, incentive plan disputes and management accountability issues. These exposures should be reviewed before completion.
• Professional indemnity
  For professional services, advisory, consulting, design, technology, financial services and insurance broking businesses, professional indemnity is critical. Buyers will want to understand historical claims, retroactive dates, continuity of cover and whether run off protection is needed.
• Cyber insurance
  M&A often involves system integration, data transfer, due diligence platforms and changes to access controls. Cyber risk can increase during the transaction period and immediately after completion.
• Warranty and indemnity insurance
  W&I insurance can help bridge the gap between buyer and seller on warranty risk. It can support cleaner exits for sellers and provide buyers with a dedicated insurance backed recovery path for certain breaches of warranties.
• Tax liability insurance
  Where a transaction involves complex structuring, historical tax issues, trust arrangements or uncertain tax positions, tax liability insurance may be worth considering.
• Property and business interruption
  If the transaction involves property, plant, equipment, stock or operational integration, declared values and business interruption assumptions should be reviewed. Tax valuation, market valuation and insurance replacement value are not the same thing.
• Claims history and known circumstances
  Known claims and potential circumstances need careful handling. Failure to notify the right insurer at the right time can create coverage issues later.
• Contractual insurance obligations
  Change of control can affect customer contracts, leases, supplier agreements, financing arrangements and licensing obligations. Insurance requirements embedded in contracts should be reviewed as part of diligence.

For insurance brokers, transition planning is also a risk management issue

The Budget changes may also be relevant to insurance broking principals.

Many broking businesses are founder led, relationship driven and built over decades. For some principals, the next two years may prompt a more active review of succession, capital, ownership and long term alignment.

That does not mean rushing into a transaction. It does mean taking a structured view of the options. Is the business ready for growth capital? Is there a natural internal successor? Is a merger the right path? Would a broader platform provide better support for clients and staff? Is now the right time to explore transition?

For insurance brokers thinking about the next stage, these conversations are best started early and quietly. The strongest outcomes usually come from preparation, not pressure.

The key takeaway

The Budget has not changed the fundamentals of good M&A. Strong businesses, quality earnings, capable management teams and clear growth plans will always matter.

What it has changed is the planning timetable.

Between now and 30 June 2027, many owners will reassess whether their current structure, succession plan and ownership model still make sense. For those considering a deal, the work should start well before the final months.

Tax advice, legal advice, corporate finance advice and insurance advice all need to come together. Done well, a transaction is not just a sale event. It is a risk management exercise, a succession plan and a strategic decision about the next chapter of the business.