Buy an existing business
Seven steps to buying a business
An organised approach will help you find and acquire the right business.
1. Get professional advice
You can also access advice on buying a business through a business broker.
2. Do your research
Research the sector you're interested in, including the best time to buy, and shortlist two or three businesses.
3. Initial viewing and valuation
Be discreet - the owner may not want staff to know they are selling, but be thorough and record key findings.
4. Arrange finance
Lenders generally require:
- details of the business/sales particulars
- accounts for the last three years
- financial projections - if no accounts are available
- details of your personal assets and liabilities
5. Make a formal offer
If you make your initial offer by phone, follow this up in writing. Head your letter subject to contract and include this phrase in all written communication.
6. Negotiate the deal
Before completing the sale, it may be worth trying to negotiate an overlap period so you have time to become familiar with the business before taking over.
You and your solicitor need to verify the information you have based your offer on. See make sure a business is worth buying: due diligence.
If you're buying premises, you may want to arrange an independent survey and valuation, even if a lender is also carrying out their own survey and valuation at your expense. Find a surveryor who specialises in commercial property.
7. Complete the sale
Even after you reach an agreement on the price and terms of sale, the deal could still fall through. You have to meet certain conditions of sale to complete, including:
- verification of financial statements
- transfer of leases
- transfer of contracts/licences
- transfer of finance
- transfer of existing or new VAT registration