How to buy a business in the UK, EU or Ukraine

Why buy an existing business rather than start one

When you buy an existing business, you start with a trading history instead of a blank page. You can read past accounts, see how sales and margins have moved and judge the cash flow before you decide. There are customers already buying, staff who know the work and suppliers who already deliver.

A business that trades can produce cash flow from the day you take over. That does not make every purchase a good one. It does give you evidence to test rather than a plan built only on forecasts. The same record usually makes an established business easier to finance than a start-up, because a lender or investor can look at what the company has actually done.

The trade-offs are real. You inherit the problems along with the strengths, and some only come to light once you are inside. They might be weak contracts, ageing equipment, a few customers carrying most of the revenue, or an owner the business leans on every day. The price also includes goodwill, which is what you pay for the customer base, the reputation and the position the business has built, over and above its physical assets.

That is why you should never skip due diligence when buying a business. It is how you find out what you are really buying before your money moves. An established company can save you years of building, but only if the figures, the legal position and the way it actually runs support the price.

A broker on the buyer's side

If you set out to buy a business in the UK, most of the brokers you meet will have been appointed and paid by the seller. Their job is to market the business and secure acceptable terms for the owner. They may answer your questions and run the sale process, but they do not act for you.

We can act for you instead, on businesses worth £200k to £50m. On the buyer's side we help you define the brief, search listed and off-market businesses, check the ones that look promising, help with the offer and stay with the process through to completion. Your own solicitor and accountant remain responsible for legal, tax and financial advice.

Instead of being shown whatever happens to be on the market, you get a search built around what you want and can fund. A business may look attractive and still be wrong for your experience, your budget or the level of involvement you have in mind. The brief keeps the search on the ones that fit.

We most often act for:

• first-time buyers who want a clear process for something they have not done before
• investors who want a search matched to their criteria rather than a browse through listings
• trade buyers looking for customers, skills, capacity or a presence in another market
• people relocating to the UK who need to find and assess a business from a distance
• buyers from the EU and Ukraine who want a going concern in the UK rather than a new venture

Browsing our listings and enquiring about a listed business is free. If you want us to search on your behalf, we agree the terms with you in writing before we start.

Businesses you will not find in the listings

Many owners sell quietly. They do not want staff, customers, suppliers or competitors to hear about a possible sale too early, so the business is never advertised. These businesses exist, and some of them may suit you, but you will not find them on a public site.

When we act for a buyer, we look beyond public listings for businesses that fit the agreed brief. This kind of search can take longer. The right owner has to be found first, and then has to be willing to talk about a sale.

Confidentiality works the same way whether a business is listed or not. Each business is shown first as a blind profile, without the name or details that would identify it. If a profile fits your brief, you sign an NDA before the name and details are disclosed. Sellers also expect proof that you can fund the deal.

For businesses that are already on the market, start with our catalogue of businesses for sale. If nothing there matches, a search on your behalf can reach opportunities the listings do not show.

How to buy a business, step by step

Every deal differs in detail, but the order of the stages stays much the same. Here are the seven steps to buy a business without committing money before you understand what you are buying. We handle the commercial side, and your solicitor and accountant advise on the legal, financial and tax detail.

1. Brief and budget

We start with what you want: the sector, the country, the budget and your timeline. We also look at how you plan to fund the purchase and how involved you want to be, because both decide which businesses are realistic. The brief form at the bottom of this page covers the same ground.

2. Search, listed and off-market

We compare your brief with businesses already for sale and look beyond the public listings. We put forward the ones worth a closer look, and you decide which to pursue.

3. NDA and initial details

You see a blind profile first. If you want to go further, you sign an NDA and provide evidence of funding. Then you receive the company name and initial details about it.

4. Meeting the owner and assessing the business

You meet the owner and see how the business runs day to day. This is the moment to test the figures against what you observe, including the owner's real role, how the team works and what a handover might involve. We help you work out what else you need to know.

5. Valuation and offer

We help you weigh the asking price against the value of the business to you and put together an offer. Beyond the price, an offer can cover how payment is made, the conditions attached and the information you still need.

6. Heads of terms and due diligence

If the main points are accepted, they go into heads of terms. Your solicitor and accountant then examine the business in detail, while commercial and operational matters are checked too. We coordinate the process and keep information moving.

7. Finance, completion and handover

Finance is put in place and the solicitors finalise the documents once the checks support going ahead. On completion, the shares or the agreed assets pass to you. Any handover follows the terms agreed in the deal.

How long all of this takes depends on finding the right business, on finance and on due diligence. No two deals run to the same clock, and a search beyond the listings can add time.

How to finance buying a business

Finance to buy a business can come from one source or several. Which mix works depends on the business and its assets, on your own funds and on what a lender, seller or investor is prepared to accept. The options include:

• your own funds
• a bank loan
• asset finance, where equipment or vehicles secure the borrowing
• a commercial mortgage where property is involved
• seller finance or deferred payment, where part of the price is paid later
• an earn-out, where part of the price depends on how the business performs after the sale
• an investor or equity partner who puts money in for a share
• a combination of these

Buying with no money of your own is rarely realistic. Lenders and sellers usually expect a meaningful own contribution, because it shows you have something at stake.

Government-backed schemes may be available. Check eligibility with a lender or adviser. We are not a lender, and we cannot promise that finance will be approved.

Our brief form asks about your source of funding and how much of the price you can cover from your own money. That is deliberate. It lets us show you only businesses that fit what you can finance, rather than deals that were never going to work.

Due diligence before you pay a deposit

Due diligence is the checking done before you commit money. It tests whether what the seller has told you is supported by documents, and whether the risks are ones you can accept. The checks are financial, legal, commercial and operational, and they usually cover:

• accounts, tax records and the quality of earnings
• contracts with customers and suppliers, and any leases
• staff, their terms and any employment matters
• how customers and suppliers are spread, and how stable those relationships are
• legal matters such as claims, permissions and licences
• assets such as equipment and stock, and liabilities such as borrowing and other obligations

Your own solicitor and accountant lead the legal and financial checks and advise you on what they find. We coordinate the process so that information reaches the right people. We are not solicitors or accountants, and we do not replace them.

You should not pay a deposit or sign binding terms before the key checks are done. Heads of terms record the intended deal, and your solicitor should tell you which parts of them, if any, are binding. Once money is paid or binding terms are signed, your room to change course narrows.

If the checks reveal problems, you can walk away. You might also ask for more information, change your offer or propose a different structure. Which of these is open to you depends on what you have signed, and that is one more reason to take legal advice before any binding commitment.

What to pay: valuation and your offer

Price and value are not the same thing. The asking price is what the seller hopes to get. The value is what the business is worth to you, given what it earns, how reliable those earnings are, what it owns and owes, and the risks you take on. The same company can be worth more to a trade buyer who can combine it with an existing operation than to someone who will run it as it stands.

Several things move value. Earnings that hold up over several years are better evidence than a single good result. It also matters how much the business relies on its owner, whether a few customers account for most of the revenue, and whether the main relationships rest on written contracts. Leases, the condition of equipment and the money the business will need in future all come into it as well.

An offer is more than one number. You can propose an amount paid on completion, a deferred payment, an earn-out or a mix of these. A deferred payment leaves part of the price to be settled later. An earn-out ties part of it to results the business achieves once you own it. Each structure spreads risk differently between you and the seller, so ask your solicitor and accountant to review it before you commit.

You can get a quick estimate in our business valuation calculator, and our guide explains how to value a business in the UK in more detail. Your final offer should rest on what the seller discloses and on the results of due diligence.

Buying a UK business from the EU or Ukraine

We work with buyers from the EU and Ukraine in English or Ukrainian. The first steps can be handled remotely, from agreeing the brief to reviewing blind profiles, signing an NDA and showing proof of funds. Meeting the owner and taking professional advice are then arranged around the business and the deal.

Buying a business in the UK from abroad follows the same order as it does for a UK buyer, with the same NDA and funding checks. A UK company can be owned by a foreign buyer. Owning a company and your own right to live or work in the UK are different matters, though.

Immigration and visa questions are separate and need an immigration lawyer. We are not immigration advisers. We help with the search and the purchase, and your immigration lawyer deals with your personal position.

Your broker

Buying a business is a personal decision, so you should know who is working on your search. You work with a named broker who learns your brief, your funding position and the points on which you will not move.

You can meet the team before you decide to work with us. Our office is at Chiswick Business Park, London W4.