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How to buy a business

Thought Leader

How to buy a business

  1. You can find details of businesses for sale through trade journals and online via websites such as or, but remember that you are not restricted to only buying those that are formally up for sale – you can informally approach any business to see if they might be interested in selling if the price is right.

  2. Be patient. It can be tempting to just dive in and buy the first business that seems ok. But you need to make sure you are buying a business that is right for you otherwise you will regret it later. Remember that there are typically far more businesses up for sale than people looking to buy them, so use this to your advantage. Take your time, and be prepared to walk away.

  3. Find out why it is for sale. If it’s such a great business, why do the owners want to get rid of it? There may be a convincing reason – they might be retiring, perhaps – but you do need to be confident that they are not selling because of some hidden horror they are not telling you about. Study their body language – are they nervous or open and relaxed? Are they keen to rush the sale through or happy to take it at a pace that suits you?

  4. Don’t take the owners word for how great the business is, do your own research into every aspect of it. Check the company accounts, annual returns and accounts at Companies House ( and go online to investigate the company’s reputation on customer review and other sites. Try to get a feel for the company’s position in its market, whether the industry is growing or declining and whether there are barriers to entry.

  5. Ask questions. Find out if the business owns its intellectual property and brand or whether it makes products for other people on a jobbing basis. Find out what kind of ongoing contracts it has with its biggest customers, and if the owners will allow it, talk to them. Ask about staff morale. Ask whether there is any outstanding litigation or problems affecting the business which have not yet been resolved.

  6. Get professional advice. Employ the services of an accountant, lawyer, or business advisor to help you value the business and conduct proper due diligence into it. Due diligence is the process which takes place once your offer has been accepted and gives you and your advisors access the business’s books to get a realistic idea of how it is actually performing.

  7. Don’t underestimate the costs involved. As well as the price of the business itself, you will need to pay for advisors and legal fees, and will probably need to invest significantly in the as the previous owners may have cut back on this ahead of a sale. You may also need several months of working capital to assist with cash flow.

  8. Consider tying part of the purchase price to the achievement of future profit and sales targets, and draw up a contract to ensure that the previous owners will be available on a reasonable basis, or even remain on staff, for a while to explain the ins and outs of the business. And include a no-competition clause to prevent them setting up a rival business round the corner.