Buying a Business

Do your research

Before you jump into the buying process, it’s important to carry out plenty of research to ensure you’re making the right choice. This includes reviewing your own position and financial health, as well as analysing the current market.

• Assess your primary motives for owning a business – are they financial, lifestyle-related, or both?
• Determine whether you have the knowledge and commitment to run a business, and whether you need to raise capital.
• Consider which sector(s) suits you best based on skills, experience, enthusiasm and lifestyle priorities.
• Decide on a broad criteria for the type of business you’re targeting.
• Think carefully about factors such as location, assessing the local economy and market demographics.

Set your maximum price

Determining the maximum price you’re willing to pay (and can afford) is crucial. The more open you are able to be with prospective sellers and their agents, the more credible your offer will be. Consult Christie Finance who will help set your price ceiling based on available equity and current lending parameters. This will ensure you’re not wasting time looking at businesses that are either unaffordable or will not provide you with the income you require. 

Decide on freehold or leasehold

Would you prefer a freehold or a leasehold arrangement? A leasehold business will provide a quicker ‘pay back’ but requires you to pay rent and you may not be able to make physical improvements without the Landlord’s consent. A freehold, on the other hand, will tie up more capital but give you greater flexibility and a longer term investment. The extra interest payments may not be much more than the rent you would be paying.

Consider your timing

How long is it likely to take to buy a business? You need to plan ahead and consider the typical length of time a transaction in your chosen sector will take take to suit your personal requirements – it could easily take 6 months to find a suitable business, and a further 3-6 months to conclude the purchase. If your capital is tied up in long term savings accounts or other investments, make sure you factor this in to any completion date you commit to.

Source opportunities

To source businesses for sale, identify suitable business agents – both national and regional – and introduce yourself to key specialists dealing with business sales in your chosen sectors. Our sector specialist at Christie & Co will advise on the current market, pricing trends, and other factors that will help you find the most attractive options. Not all businesses are openly available for sale as some are sold confidentially. The better we know you and understand your requirements, the easier it will be to match suitable opportunities.

Compile a long and short list

Register on Christie.com which has hundreds of businesses which are genuinely for sale — new opportunities which match your criteria will then be automatically sent to you. First, compile a long list of businesses which look initially attractive, and then narrow these down to create a shortlist of two or three businesses which match your requirements most closely. Our agents will be able to answer any initial questions that you have to help in this process.

Arrange a first viewing

Before viewing the property for the first time, do your local research in advance and have a list of reasonable questions to hand – you might want to inquire about why the owner is selling, or what assets are included in the purchase. You can request more detailed information about the business from the agent in advance of or after the viewing.

Arrange a second viewing

Like buying a house, you may want to view any business you’re interested in at least once. This gives you a further opportunity to record key findings and have a more detailed and pragmatic visit to the business, setting any emotions aside. The vendor will know you’re interested at this point, so you can have a more in-depth discussion to decide whether the business is right for you.

Submit a provisional offer

Once you’ve found the right business, Christie Finance can help formulate an offer, liaising with finance lenders to source financing for the purchase if necessary. 

When submitting your offer, ensure you have all the key information about the business, and perhaps line up a lawyer and accountant in anticipation of moving forward. Christie & Co can make these introductions if necessary. It’s very important to provide documentation to support your funding position and a realistic timeline to completion. The vendor will closely factor these into the decision whether to accept your offer

Offer accepted!

Once you’ve agreed a purchase price and had your offer formally accepted by the seller, there are several important ‘work streams’ to manage to ensure your purchase moves forward efficiently.

You can expect your business transfer agent to prepare a ‘Memorandum of Sale’ which instructs the vendor and buyer’s solicitors. Christie Finance will advise on the fundraising process, but banks will also require a formal valuation of your personal assets. You may also wish to instruct a property survey to assess the condition of the premises. You will need a pro-active solicitor to act for you and keep your purchase moving.

Carry out ‘due diligence’ 

Before you move to exchange of contracts, due diligence is required to ensure that the financial, commercial, legal and property parts of your purchase are in order. This might include a review of:

• The Financial performance of the business
• A property survey
• Compliance with the latest regulatory requirements
• Title and other legal checks to ensure that you are protected

The due diligence process (including legal due diligence) is typically undertaken by your various advisors – your specialist agent at Christie & Co will help manage and guide you through these steps.

If you’re buying a business within a regulated sector, you’ll also be required to register with the appropriate body – it’s important to take specialist advice on this.

Exchange contracts and complete

The big day! Depending on the business sector you’re buying in, a purchase typically takes 3-6 months from the point you instruct your solicitors to when you complete — so you should have plenty of time to get ready to take over the business. Christie & Co can prepare a press release announcing the takeover, which will provide you with some good early publicity!