Buying a business: Getting started
In this article, we explain how you get started on the road to buying a business.
Finding a business
The first step is to find a business to acquire.
Often, the business will be one which the buyer has already dealt with. For example, a competitor, supplier or distributor. It can help if you already know the business.
Alternatively, businesses can be found through personal contacts, brokers, advertisements in the trade press, or websites offering businesses for sale.
Once you have chosen a business to purchase, you will need to carry out some initial investigation, with a view to valuing the business and agreeing a price. The valuation will cover such things as premises, equipment, stock, debtors, creditors, goodwill and other assets. Valuations are normally done with the help of an accountant, valuer or broker.
Financing the deal
The next step is obtaining the necessary finance.
Unless you can fund the acquisition from your own resources, you will need funding from a bank or other lender. The lender will want to see a business plan and cash-flow forecast for the business and will require security for the loan. This can be in the form of a charge over the assets of the business, or even personal guarantees from the directors or shareholders of the buyer and charges over their own homes.
If you are being asked to give personal guarantees or a charges over your own home, you need to think very carefully before doing so. If you cannot repay the funds you are borrowing, you may risk losing all your personal assets.
Click here to read the full briefing series: Buying a business.
If you are looking to sell your business, please see our ‘Selling a business’ series.
For more information or guidance, please contact:
Partner and Head of M&A
T. 020 7227 7441
This briefing is for guidance purposes only. RadcliffesLeBrasseur accepts no responsibility or liability whatsoever for any action taken or not taken in relation to this note and recommends that appropriate legal advice be taken having regard to a client's own particular circumstances.