A practical guide to buying a business from researching and viewing to valuating and negotiating. Follow this quick step by step guide to avoid pitfalls and get the best deal.
- Get professional advice - Professional help is invaluable as you go through the negotiation, valuation and purchase process. You will need the assistance of a solicitor or an accountant.
- Do your research - Research the sector you’re interested in, including the best time to buy. Shortlist two or three businesses. As well as checks on the business, your solicitor will conduct searches at the local planning office and land registry in order to verify relevant licences etc.
- Initial viewing and valuation - Be discreet here, the owner may not want staff to know they are selling, but be thorough and record key findings.
- Arrange finance - Lenders generally require details of the business/sales particulars, accounts for the last three years, financial projections - if no accounts are available and details of your personal assets and liabilities.
- 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.
- Negotiate - Before completing the sale, try to negotiate an overlap period so you have time to become familiar with the business before taking over. Record all the main points agreed. Ideally, the existing owner will agree to a period of guiding trading with him/her in the store for a few weeks as you begin.
- 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
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