Buying a Business – Top Ten Tips from Lawson-West
1. As well as the business itself, get to know the area of work you’re buying into. Consider the location of the business and its potential for growth.
2. Don’t buy on a whim. Consider whether you could step into the shoes of the owner tomorrow. If not, is the problem remediable e.g. through training or by employing a manager.
3. If the business is a limited company then consider whether you want to buy the assets of the business or the shares. Much of the decision will be driven by tax considerations so discuss with your accountant.
4. Is the business freehold or leasehold? Try to get a copy of the title deeds to the property before committing yourself and ask your legal adviser to check for problems before making any significant financial commitment. If the property interest for sale is leasehold, then try to get a copy of the lease as well.
5. Are there any employees of the business? On the sale of a business, employees have a number of rights and failing to consider those rights can be costly. At Lawson-West we have a dedicated employment lawyer ready to advise you on that all-important asset.
6. Consider whether you have sufficient money to finance the purchase or whether you will need a loan. If finance is required, you will need to show a sound business plan. Don’t forget, you need to find not just the purchase price for the business but also money for stock, professional fees, rent and possibly a rent deposit (if leasehold), payments for suppliers and start-up funds.
7. Make sure all necessary enquiries are made. This is called due diligence and the results can affect your decision whether or not to proceed. It might also result in a change in the structure of the transaction to make a tax saving or the identification of a legal or other problem that can enable you to re-negotiate the terms of the deal.
8. Make sure you have a good team around you. We are specialists in commercial property and deal only with business and commercial property transactions so we have the skills and experience to help and guide you throughout the transaction. Our advice is always practical, completely independent and intended to solve problems, not create them.
9. Plan your timing and be realistic. Being in business ourselves, we understand that speed of delivery is very important to all businesses and we do our best to complete transactions in the timescales required. Obviously much depends on other parties and their advisors but even then we can often reach temporary arrangements that enable your business to proceed as planned.
10. Above all, remember the golden rule – caveat emptor (buyer beware). Here at Lawson-West our aim is to minimise your risk through effective due diligence and warranties from the seller.
If you’re thinking of buying a business and you want to talk to someone freely and without obligation then call Katherine Cereghino today on (0116) 212 1148.
