Table of Contents
Buying an existing business is an exciting and challenging time. On the one hand, the opportunity to grow and maintain a profitable company is thrilling. On the other hand, a foolish business purchase can result in financial loss and ultimate failure. Accordingly, it is common for prospective business owners to obtain professional advice during a company purchase process. This article will explore which types of professionals could assist you during a potential business purchase in the UK.
LegalVision’s Buying a Business: Guide to Negotiating Terms allows you to protect yourself by understanding which key terms to negotiate when buying a business.
What Types of Advice are Useful During a Business Purchase?
Whilst much depends on the nature of the business, it is common to require advice regarding various factors. Some examples of valuable advice include:
- assistance carrying out due diligence regarding the company’s finances;
- considering the broader market and whether it is the right time to invest;
- obtaining a second opinion on the financial merits of the deal; and
- ensuring that the contents of all legal papers, most notably purchase contract documentation, are thoroughly checked and researched before signature.
Business Bankers
There is no point in turning up to a potential deal with no funding. Whilst an accountant will help you invest money wisely, they cannot advise on money that does not exist. This is where a business banker or a business broker can help.
The starting point is to obtain sufficient funds to cover any potential deal. Most business transactions are funded, at least in part, by a financial lending institution or bank. A business banker will ask for detailed reasoning behind your planned company purchase and determine whether a financial institution will provide that degree of lending. They will also detail what restrictions and conditions may accompany the monies in question.
Many financial institutions are wary about lending large amounts of money, so they will only provide final, binding approval late in the process. In this way, it is wise to insert wording into any purchase documentation, making it clear that the purchase is subject to final lending approval.
Continue reading this article below the formCall 0808 196 8584 for urgent assistance.
Otherwise, complete this form and we will contact you within one business day.
Accountants
Once you believe that you have potential funds in place from an investor or financial institution, the next step is to obtain advice from an accountant on whether any deal would be financially feasible. After all, just because a business deal is possible does not mean it is sensible.
An accountant will consider various factors when considering whether the purchase of an established business is sensible. Some relevant factors may include the following:
- whether the purchase price and ongoing cost of financing the target business are within your financial capabilities;
- any debts or liabilities that may require repayment in the near future;
- whether any lending conditions from an investor or bank are too restrictive or may hinder the effective management of the business;
- the likely profitability and goodwill associated with the company; and
- whether the deal makes sense from a tax perspective (especially if you own other companies).
If the prospective deal is on firm ground, an accountant may suggest creating a financial plan for the new business. This plan would usually include the following:
- calculations of likely income and profit over the first few years of ownership;
- predictions of potential future expenditure;
- budgeting suggestions and efficiency savings; and
- a general business plan of how to improve the company.
Business Lawyers
The final link in the buying process is usually a business sale lawyer. An expert lawyer can help you with some of the following tasks:
- reviewing the wording of the sale of business agreement;
- ensuring adequate due diligence has been done;
- offering legal advice on the main risks involved with the purchase;
- ensuring you do not sign contractual documents with unbalanced, unfair obligations;
- negotiating a better financial deal; and
- ensuring legal documents are correctly signed and finalised.
In this way, a lawyer usually reviews the deal to date regarding funding, finances and negotiations. If everything looks sound, a lawyer can help you finalise legal documents that accurately record the deal in writing. Essentially, a lawyer can help you get a deal across the line in a legally binding manner.
Key Takeaways
Buying a business is far from straightforward. However, with risk comes reward, and the main merit of appointing professionals to assist you is to reduce the risk and enhance any reward. Three main types of professionals who can assist you when buying a business are accountants, lawyers and business bankers.
If you need help purchasing a UK business, our experienced business sale lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on 0808 196 8584 or visit our membership page.
Frequently Asked Questions
Yes, some professionals can provide you with a business valuation. Valuing a company is a complex task and depends on the size of the company and the nature of its business assets.
Not necessarily. Most professionals will provide a cost estimate based on the likely time spent assisting you rather than on whether the business is small or large.
We appreciate your feedback – your submission has been successfully received.
