What Do I Need To Consider When Buying A Business?

There are many reasons why individuals want to buy a business rather than start their own – and there are advantages and disadvantages for both options.

 

Commercial law is complex and it’s important to understand what each option offers so you can make the right business choice for you.

 

Often an established business comes with loyal customers, a known brand, employees, and a proven track record. However, the business buying process is far from straightforward and our specialist solicitors are here to help you navigate it all and avoid potential pitfalls – whether that’s deciding if you should buy in the first place or guiding you through the purchase stages.

Which Business Should You Buy?

Before you start the process of buying a business, consider and understand your reasons for buying and what exactly you want from the business in terms of your future plans.

 

What are your skills, experience, commercial plans, and budget? Your answers will help to steer you towards finding a business that will work with your strengths and finances.

 

Factors to consider at this stage, include:

• The reasons for the sale
• The state of the business – finances and premises
• Whether improvements are needed
• The level of investment required – time and money
• If it’s the right business for you

 

Seek professional advice on the industry your desired business operates in, so you can understand if the company is performing well.

How To Buy A Business

If you find a business you want to buy, make sure you complete the steps involved correctly to protect your interests.

 

Investigate The Business

Carry out initial research before you make an offer.

 

It’s a good idea to visit the company to see it for yourself and understand the premises and the condition of the company. Speak to the current owner to find out why they’re selling. It’s also advisable to visit the business as a customer and to ask friends and family to do the same – this will give you an insight into its operations, customer service, and what its products or services are really like.

 

Although the seller will likely provide you with a valuation for the business, it may be  helpful to get your own one too as this will be unbiased, and to go through this with your solicitor. You’ll gain a better understanding of the company’s finances, today and from previous years, as well as the reasons for the sale and whether there are any legal issues or financial concerns with the business.

 

At this stage, it’s worth looking into how you’d pay for the purchase of the business. If you require a loan, you’ll need to provide any potential lender with financial information that incudes the last 3 years’ accounts and future forecasts.

It is also sensible to consider and discuss with your Solicitor the vehicle for your purchase (would it be sensible to set up a Limited Company to acquire it) and the structure of the sale (Asset Purchase or Sale of Shares).

 

Make An Offer

Once you’ve made an offer and it’s been accepted, you should conduct due diligence. Your solicitor can help you with this process to identify and resolve any risks or issues, as well as negotiate, prepare documentation, carry out due diligence checks and help with all legal matters such as lease and asset transfers.

 

Your solicitor will also help with the contract that is drawn up as part of the business buying process. They will ensure it is legally watertight and your interests are protected – for example, it’s sensible to have a restraint of trade clause in the contract as this prevents the seller from starting a business to compete with yours.

A good solicitor will also wish to liaise with your Accountants to ensure that tax advice is obtained for you.

 

Buy The Business

The purchase completion happens when the business assets or shares in the seller’s Limited Company are  transferred from the seller to you and all the paperwork and financial matters are completed. At this point, the business is now legally yours.

Helping You With Your Business Purchase

Our specialist commercial property solicitors can help you with the whole process of buying Business Assets or Shares in a Limited Company  – from conducting the initial research into potential companies and understanding a business’s valuation through to making an offer, conducting due diligence, and agreeing the terms of purchase.

 

Get in touch with us today if you’re thinking of buying a business, selling a business, merging a business or remortgaging business premises. With our help, you will achieve the outcome you want while safeguarding your business interests and future commercial plans.

 

To speak to one of our professional solicitors about your business, please contact us at our Chorlton office on 0161 860 7123 or email chorlton@hlfberry.com or at our Failsworth office on 0161 681 4005 or email failsworth@hlfberry.com