Our series of blog posts look at the key things you need to consider before you buy a business:
Part one: What are you buying?
Part two: Are you buying the freehold of the property or a lease?
Part three: What contracts are in place for the current business?
Part four: The finances why is the business up for sale and are the accounts accurate?
In this first post we're going to prompt you to ask yourself the questions...
1. What 'entity' are you buying?
If you are, you are buying all of their debts and liabilities so this is going to be a much more time consuming transaction. You will need to find out everything about the company before completing to try to reduce the risk of nasty surprises.
If you are not, and you are buying the goodwill of the business together with assets, does this include buying the trading name? If so, you need to include a restriction in the agreement so that the seller cannot use this name in future.
2. Are you buying ALL of the items to enable the business to run?
If so, what are the charges and can you take over the agreement?
Don’t rely on the seller’s assurances, check them yourself. If you check nothing else, check the expensive items such as cookers, fridges, boilers and air conditioning. If they aren’t working, will the seller agree to repair them before completion or will they reduce the price so that you can repair it? Don’t forget to check that repair is possible though!
Agree a list of items to be included with the seller and attach this to the agreement. If the item is missing on the day of completion, you can then make a claim against the seller.
3. Will you have to pay extra for the stock?
Perishable stock is often worth less than the price it was purchased at so you may want to factor that into the calculation agreed.
If not, you may have to go shopping on your first day of business!
Emsleys’ Commercial team can help with all aspects of selling or buying a business. for a free initial consultation and no obligation quote.Back to Blog