What To Look For When Buying A Business

What To Look For When Buying A Business

What To Look For When Buying A Business

Buying a business is a really exciting prospect. However, it can be daunting knowing where to start. Not only is it a huge decision, but it’s also a big commitment too. You need to put a lot of thought into buying a business and it’s a decision that certainly shouldn’t be taken lightly.

As accountants in Peterborough, we have helped people just like you buy and sell businesses. Below we have put together a few of the things that you should look out for when buying a business. If possible, we would always recommend that you speak to a professional accountant, like our team, to help ensure you are making the right decision and your finances are in shape for the deal.

  • Documents

It’s important to ensure that you have all the right documents. There are a number of documents that need to be in place before you enter a sale of contract. This will include documents like a head of terms. These will often be drafted by a broker to form the basis of the sales agreement. This means that they need to be correct from the start. It’s a good idea to put a confidentiality agreement in place too. This will enable you to carry out due diligence on the business that you want to buy.

  • Research

Once the documents are in place, you need to start some in-depth research. Find out why they are selling the business in the first place. Check if there are any issues around the business that could or do raise concerns. It’s important to ensure that the business has the proper contracts in place too. Take the time to check if the business is involved in any disputes and if these may cause issues for you in the future.

  • Professionals

This is where it’s a great idea to bring in the professionals. For example, an accountant can check and confirm that the business valuation is accurate and worth what the seller claims. A solicitor can draft a share purchase agreement for you and advise on more complex issues. As the buyer, you will be responsible for preparing this sale purchase agreement. A solicitor will help to ensure that you are both covered legally and that the seller delivers what they promised for the price that was agreed.

  • Third Parties

To be able to run the business effectively you may require third party approvals or consents. These need to be transferred to you or obtained before the transaction can be completed. One example of this is if the business has a regulator or bank loan charges that may need to be discharged.

  • Companies House

Once the sale of the business has been completed, it is your job to ensure it is properly documented. This can be done by lodging transfer documents at Companies House. This will ensure that the shares are transferred to you, as the new owner of the business. There may also be other post-completion formalities that need to be managed. This includes things like stamp duty payments or post completion accounts for example.

If you are considering buying or selling a business, call our team of experienced accountants in Peterborough. We can help ensure the value of the business is realistic and help you with some of the documents and due diligence, alongside your other advisors. Always exciting times whether you are considering buying or selling, to meet your forward financial objectives.