Buying a company that's already established may be quicker and easier than starting from scratch. However, you will need to invest time and effort into finding the business that's right for you.
Any business you buy needs to fit your own skills, lifestyle and aspirations. Before you start looking, think about what you can bring to a business and what you'd like to get back, what are your strengths and what sectors are you interested in? List what is important to you and what you ultimately want to achieve.
Ensure you have sufficient funds to cover not only the purchase price of the business but other likely costs. These may include:
Stock at valuation
Quarterly rent, payable in advance (if leasehold)
Rent deposit, of up to 6 months, may be required subject to references.
Bonds for certain services/suppliers e.g. Lottery, wholesalers.
Study the sector you're interested in and shortlist two or three businesses, bearing in mind the amount of capital you have to invest and the level of profit you need to earn.
Arrange to view the business through Adams & Co and gather as much information as you can. Some business owners don’t tell their staff they are selling, so as not to risk them taking their eye off the ball at a time when the performance of the business is under close scrutiny. Comply with these wishes and remember to maintain a friendly, and professional relationship with the seller.
Before you consider making an offer for the business ensure you thoroughly review financial records, lease agreements, contracts, licences, patents etc. You should review any business records that will provide you with information to help you decide whether the business is a good purchase.
If you require finance, then lenders will 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
After many years of successful operation in business transfer Adams & Co have built excellent relations with a number of reputable sources of funding and legal expertise. We would be pleased to recommend professional companies for your consideration no obligation to you
Once an offer has been made and accepted you will be allowed a period of time to verify the information you have been given. This is known as due diligence.
There are traditionally three types of due diligence. You might need different advisors for each:
Legal due diligence - as part of a sales and purchase contract, the lawyers can check that the business has legal title to sell, ownership of all the assets and that regulatory and litigation issues are fully addressed
Financial due diligence - checking the numbers and making sure there are no black holes or hidden financial issues
Commercial due diligence - finding out the business' place in the marketplace, checking competitors and the regulatory environment
Don't start due diligence until you have agreed a price and terms with the seller. They may agree to take the business off the market during your investigation. This is known as an exclusivity period and the seller will often ask for a down payment to secure it.
Before completing the sale, you may want to agree an overlap period so you have time to become familiar with the business before taking over. You will also have to meet certain conditions in order for the 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
Adams & Co have been selling businesses to buyers since 1951 and are ideally placed to advise you on most aspects of purchasing a business. Speak to a member of our team for professional and friendly advice.
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