How to buy an existing business

Business advice courtesy of Business Link.

How to buy a business.

An organised approach will help you find and acquire the right business.

1 Get professional advice

Professional help is invaluable as you go through the negotiation, valuation and purchase process. You can find details of how to find professional help in our guides on how to choose and work with a solicitor and how to choose and work with an accountant.

You can also find clear advice on buying a business through a business broker on the Lucas & Weston website – Opens in a new window.

2 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

There are several possible sources of finance you could consider. For specific advice, see our guides on loans and overdrafts, financing from friends and family and equity finance.

Use our interactive tool to find and secure the right finance for your business needs.

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 Negotiation

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 the page in this guide on how to 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. You can find a surveyor who specialises in commercial property on a business property website. Search the surveyors’ database on the Royal Institution of Chartered Surveyors website – Opens in a new window.

7 Completion

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

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