There are some key steps to take into consideration when looking to buy a business in the UK and around the world, to help you avoid any nasty surprises or come unstuck at any point. Advice to Buy have over 35 years’ experience helping people buy businesses of all natures.

We can help you get yourself in check when it comes to buying a business, be it a struggling business, an already successful business or a brand new one. It is key that the right considerations are made and the right questions asked to make sure the business in question is best for you and your circumstances and our experts will help you do just that, using our extensive business experience.

GET in TOUCH

Get in touch with us today to get yourself in pole position to buy a business that is best for you and your future. With over 35 years’ experience, we will help ensure you buy the business that is right for you.

Call Us – 0203 807 3886
Email Us – blast@advicetobuy.com

Buying a Business is not Always Easy

buying-business-dealFrom the outset and even before you commit to anything, including an agreement in principle with the seller or another party, find a business for sale in an industry or service area in which you have (preferably extensive) experience and strengths. Then, you should ensure the asking price is within the range you can afford, although there is almost always room to push the initial price down. Remember to take your time and consider all factors, as it is possible to make mistakes in business if proper consideration is not afforded.

Legal Details of Buying Businesses

On the legal side when looking to buy a business, a Seller will often insist you sign a Letter of Confidentiality at the beginning of the discussions, as you will be privy to many details of their business and its ins and outs. In return, you can request a period of exclusivity, i.e. for 2 months from when you begin your investigations, during which time they cannot offer the business to anyone else.

Assessing a Business’ Finances

Study the Seller’s prepared pack in detail. This should, at the very least, include the last three years’ Profit and Loss accounts, the last three years’ Balance Sheets, and projections for at least one year.

Focus on the financial information which needs to be analysed carefully and in detail. Normally, the first two years will be ‘audited figures,’ whilst the third year will be management figures. These are normally easy to check, but one has to be aware of anomalies that may be indications of details that may require additional investigation; this includes things like rising turnover with a slower rise in profits. That said, sometimes there are benefits to purchasing a struggling business.

buying-business-legalitiesHarder however is the subject of projections, which will inevitably be aggressive, ambitious and sometimes even over-inflated. Because they refer to the future and what is ‘projected’ they cannot be fully proven or disproven. Arguments on how these projection figures were reached are commonplace, and will often have a bearing on the purchase price negotiations.

Contact us for early advice on how to move forward and we will help get you in pole position to buy the best business for your needs and your future.

How to Go About Buying a Business

One suggestion will normally be to buy the assets of the business, rather than the company itself. The reason for this, is that companies often come with baggage; perhaps a tax issue that has not been resolved, litigation from a dissatisfied customer or competitor, or a pending tribunal with an ex-employee who felt they were unfairly dismissed. The last thing you want as a potential purchaser is to be forced to deal with historical issues.

Research the Industry

In addition to studying the ‘Sellers Pack,’ conduct the necessary research around the current state of the industry in question, the location and any potential developments pending. It also helps to talk to suppliers and customers of the business, although doing so will require the agreement of the seller, which is usually not forthcoming.

It is also helpful to talk to key employees, but whether you will be allowed to do this will depend on whether they have been made aware of an impending sale.

After the first round of analysis of the business and its wider industry is complete, including research, meet with the Sellers and discuss everything you want clarified. Any areas of concern should be raised at this point, so that they can be used later to explain why your offer price is lower than the asking price. After this meeting, you should be in a position to form an initial view on whether you wish to continue the discussions. If the answer is yes, let your accountant and lawyer begin their process.