Buying a business can be far more complex than is first apparent. There are a number of highly significant legal, financial and practical issues and potential pitfalls for a buyer to be aware of. We hope the checklist below is a useful starting point for you.
We would be delighted to discuss with you any prospective situation where you may be buying a business and to offer you a fixed fee quote for advice, so please do get in touch.
- Why is the business being sold ?
- How long has the business been going ?
- Where is the potential for future growth and are there market threats relating to the business sector ?
- Who are the competition and what are their strengths and weaknesses
- What makes the business successful ? Is it unique products or service, superior service, location, goodwill, staff ?
- To what extent is the seller connected to the success of the business and how would you fill the gap left by him/her/them ?
- How profitable is the business?
- Do the audited statements and tax returns add up and what is the current financial position.
- Are there any problems with debtors, if so why ?
- Are sales increasing or declining ?
- Is there any current or historical litigation involving the business ? If so, why, and how does the seller propose to deal with this ?
- Does the business have any long term contracts with customers or suppliers ? If so, what are the implications for you as buyer ?
- Has the business ever been investigated by tax or other regulatory bodies and/or been prosecuted ?
- Will the owner agree not to compete for agreed period of time post completion ?
- If the business occupies premises on a commercial lease, is the lease suitable, assignable, extendable and does it contain any onerous clauses ?
- What is the position on intellectual property rights – does the business own any trademarks, design rights or such like, where is the business data and is it in good and complete shape, what digital assets does the business have. What is the position regarding any websites for the business.
- How many employees does the business have – what is their status, check all records including contracts of employment, policies, procedures, absences, disciplinary records very carefully
- Identify the assets and liabilities to be sold
- Warranties, indemnities and disclosure
- Vat considerations
- Stock valuation provisions
- Consider the provisions of TUPE
- IT and IP issues such as websites and trademarks
- Goodwill protection
- Apportionments of the price and outgoings
- Release of assets from lenders’ charges