Buying a Business

Businesses are bought and sold for a variety of reasons just like any other commodity. There are, unfortunately, a number of severe problems involved in buying an existing business and it is essential that you have professional assistance from the outset. At the very least you will require a competent commercial lawyer together with an accountant who has experience in this field.

Inspecting the Business

Having identified a suitable potential business to purchase you will need to make a significant number of visits. These should be conducted at different times, on different days, to gain an overall feel of how the business operates. They will also give you a chance to meet any staff and assess how well they work.

Managing the Buying Process

Hopefully, by this stage, you will have recognised the difficulties involved in valuing a business. Most of these problems can be resolved by a suitably qualified accountant. Before you can agree a final price, however, you must undertake a process known as 'due diligence'. Effectively, this process will investigate all aspects of the business and it will take some time to complete. This is where only a commercial lawyer can help you. They will ensure that the business has complied with all relevant legislation and that the records are complete and accurate. They can also assist you with:

• Drawing up a suitable contract of sale - with appropriate provisions to stop the vendor setting up a new business in competition. It may also include some element of assistance from the vendor in running the jointly for a limited period to ensure a smooth hand-over.
• Compiling a schedule of all assets and liabilities that are to be included in the deal and the agreed valuation or details of how they will be valued.
• Searching the registers at Companies House for details of all directors of the business, the shareholders and any security that has been granted.
• Completing the necessary fonns to register the transfer of the business and the names of the new directors and shareholders with Companies House.
• Investigating the property with the local planning authority - you will need to ensure that no changes to the surrounding areas are proposed that could adversely affect the business.