How to Buy a Business in the UK: Step by Step

Buying an established business can be a faster route to a working income than starting from scratch: the customers, staff, premises and systems are already there. But it is also a big financial commitment, and most of the risk sits in the details. This guide walks through the stages a typical UK purchase goes through, so you know what is coming and what to check at each step.

1. Decide what you are looking for

Before you look at a single listing, write down what you want: the type of business, the area you can realistically run it from, the most you can pay, and the income it needs to give you. Be honest about the hours you will work and the skills you bring. A clear brief stops you wasting weeks on businesses that were never going to fit, and it makes you a more credible buyer when you speak to agents.

On Find My Businesses you can save this as a brief, and your Finder checks every new business against it.

2. Get your finances in order

Work out how much of the price you can put in yourself and how the rest will be paid for. Most small business purchases are funded by a mix of savings, a bank or specialist lender, and sometimes part of the price paid later to the seller. Lenders will want to see your own stake, the business's accounts and a plan, so start the conversation early. See our guide to funding a business purchase.

3. Find businesses and ask the right questions

Most businesses are sold through business transfer agents, who market them on portals like this one. Many listings are confidential, so the name and exact location are only released once you have signed a non-disclosure agreement (NDA). Expect to give the agent some details about yourself and your funding before they send the full information pack.

When you read a listing, look past the headline price. What is the net profit, and how much of it depends on the current owner? Is the business leasehold or freehold? How long is left on the lease? Our guide to reading a business for sale listing covers what each figure means.

4. Visit, and talk to the owner

A viewing is your chance to see how the business really runs. Go at a busy time and at a quiet time if you can. Ask the owner why they are selling, what a normal week looks like, who the key customers and suppliers are, and what they would do differently. Listen for anything that does not match the figures you have been given.

5. Make an offer

Offers are usually made through the agent, often subject to finance, due diligence and a satisfactory lease. Be clear about what the price includes: stock is normally paid for separately at valuation on completion, and fixtures, equipment and vehicles should be listed. Once an offer is accepted, the agent will usually issue heads of terms setting out the main points of the deal.

6. Due diligence

This is where you check that the business is what you were told it was: the accounts, the bank statements, the lease, the staff contracts, the licences and any legal or tax issues. It is the most important stage of the whole purchase, and the one buyers most often rush. Our due diligence checklist sets out what to look at.

7. The legal work

Instruct a solicitor who regularly handles business purchases, not just property. They will draft or review the sale agreement, deal with the lease assignment or new lease, and check the transfer of staff, contracts and licences. Most small businesses are bought as an asset purchase rather than by buying the company's shares; the difference matters, and is explained in our guide to asset and share purchases.

8. Completion and handover

On completion day the money is paid, the keys and records are handed over, and stock is counted and valued. Agree a handover period with the seller in the sale agreement so they introduce you to staff, customers and suppliers and show you how things run. Plan your first few weeks before you start, and change as little as possible until you understand why things are done the way they are.

Where buyers most often go wrong

• Falling for a business before checking the figures, then justifying it afterwards
• Relying on figures the owner gives verbally rather than on accounts and bank statements
• Not reading the lease, or finding out late that the landlord will not agree to assign it
• Underestimating how much the business depends on the current owner
• Leaving no money in reserve for the first months after completion

Buying a business is a process, not a single decision. Taking each stage in turn, and walking away when something does not add up, is what separates a good purchase from an expensive lesson.