Buying a business can give you an established customer base, people and operating systems. The opportunity is attractive only if those strengths survive the change of ownership. Start by asking what you will own, how the business will operate without its seller, and how much cash you will need after completion.
Decide what you are buying
In a share purchase, you acquire shares in the company. The company remains the same legal entity, with its existing assets, contracts and liabilities. In an asset purchase, the agreement identifies the business assets and liabilities being transferred. That can require separate arrangements for premises, contracts, intellectual property and employees.
Neither structure is automatically better. Put your commercial aims beside the seller’s proposal and ask your legal and tax advisers to compare the consequences. An asset purchase should not be treated as a guarantee that no liabilities will follow the business.
Build a budget beyond the price
Prepare a simple funding schedule: purchase price, adviser costs, taxes, lender costs, immediate investment and working capital. Model what happens if customers pay later or the seller leaves earlier than expected. The money available for the price is not the same as the money available for the whole acquisition.
Move from interest to evidence
Use confidentiality arrangements before exchanging sensitive information. An indicative offer and heads of terms can organise the proposed structure, price assumptions and timetable. The wording determines which provisions are binding; confidentiality or exclusivity can carry obligations even where the proposed sale remains subject to contract.
Then test the case for buying. Identify the largest customers, recurring income, key staff, ownership of important assets and dependence on the seller. Allocate financial, tax, legal and operational questions to people qualified to investigate them. A completed questionnaire is evidence to assess, not proof that the investment is sound.
Make a documented decision
Keep an issue list with an owner, evidence, commercial impact and proposed response. A finding might lead to more investigation, a price discussion, a contractual protection or a decision to stop. Whether you can withdraw without consequences depends on what you have already agreed.
Use the buyer document checklist to organise preparation. The Business Buyer Toolkit supports those early stages; transaction-specific sale agreements, disclosure and completion work need your advisers.
Sources and further reading
General information for England and Wales. Your circumstances may require legal, tax, financial or other professional advice.
Your next practical step.
Check the contents and scope of the documents relevant to this topic.
Acquisition confidentiality and NDA pack
Protect information shared while exploring an acquisition, using the appropriate confidentiality agreement and completion notes.
See contents and suitability
Acquisition heads of terms
Set out the proposed commercial terms before detailed transaction documents are prepared. Separate share and asset purchase variants are planned.
See contents and suitability