I’ve found a business I’d like to buy. What happens next?

Magnifying glass looking at a sales chart.

21 Apr I’ve found a business I’d like to buy. What happens next?

Posted at 14:57h in Company & Commercial Law by Janice ODonnell

You have been looking at buying a business for some time. Then one appears that seems to fit. The brand is established. The customer base looks loyal. On the surface, it feels like the right opportunity.

It is easy to think the hard part is over. But finding the business is only the beginning.

“I’ve found a business I’d like to buy, what next?” The answer is usually the same – slow down, ask careful questions, and test the detail before committing.

Andrew Dongworth, Company and Commercial Solicitor at HRJ Foreman Laws Solicitors highlights the process that most buyers should expect.

Step 1 – Understand what you are buying

This is usually the first point to ring a solicitor.

At the start, a business often looks like a single opportunity. In legal terms, it may be one of two very different things. You may be buying the company itself, with its full history, assets and liabilities. Or you may be buying only the assets of the business, such as stock, equipment, goodwill, contracts and the trading name.

That distinction matters more than many buyers first realise.

If you buy the company, you may also inherit its past problems. If you buy selected assets, the deal can often be structured more narrowly, so that only agreed assets and liabilities transfer. That affects risk, tax, staff, contracts and the shape of the whole transaction.

This is why a solicitor should be involved once the deal becomes serious, and certainly before heads of terms are finalised or money changes hands. A solicitor can help identify what is being sold, what legal risks may come with it, and what documents need to be reviewed at the outset.

At the same time, the first information should start to come in. This may include accounts, lease papers, staffing details, supplier arrangements, customer figures and tax records. That is often the moment when the business stops being an attractive idea and starts becoming a set of facts.

An accountant can begin checking whether the financial picture is consistent. If the asking price already looks ambitious, a valuer may also be useful at this early stage.

The aim here is to understand the shape of the deal before getting too far into it.

Step 2 – Understand why the business is being sold

If the business is thriving, why is the owner stepping away now?

If future growth looks so strong, why pass that opportunity on?

There may be entirely sensible answers, but they should sit comfortably with the trading history, customer position and financial performance.

This is not about suspicion for its own sake. It is about context.

An accountant can compare the seller’s explanation with the numbers. If, for example, turnover is uneven, margins are falling or cash flow is under pressure, that may tell a different story from the sales pitch. A solicitor can also help identify whether the reason for sale may point to legal issues behind the scenes, such as disputes, lease problems, regulatory concerns or ownership issues.

A buyer does not need a perfect business. What matters is knowing the real position before making a commitment.

Step 3 – Check whether the asking price is fair

The asking price is only a starting point. A business is not worth that figure simply because the seller says it is. It is worth what it can realistically deliver to a new owner. That is an important difference.

Some businesses perform well because the current owner is deeply involved in the day-to-day running. They may have long-standing personal relationships with customers, informal knowledge that is not written down, or a way of operating that depends heavily on their presence. Once that owner leaves, the business may not perform in quite the same way. That is why valuation needs careful thought.

A buyer should look beyond turnover and ask harder questions. How much profit is genuinely sustainable? Are there debts that need to be taken into account? Is stock worth what the figures suggest? Are there future costs on the horizon? How much of the business depends on one customer, one contract or one key member of staff?

This is where an accountant and, in some cases, an independent valuer can be especially important. An accountant can test profit, cash flow, working capital and debt. A valuer can help assess whether the asking price reflects the real value of the business rather than an optimistic headline figure.

A solicitor also has a role here. If part of the price is to be deferred, linked to future performance, or held back after completion, those arrangements need to be properly documented and protected.

By the end of this stage, the buyer should have a clearer sense of not just what the seller wants, but what the business is really worth.

Step 4 – Carry out legal and financial due diligence

This is where assumptions are tested properly.

Once the deal begins to feel real, buyers often reach the due diligence stage. This is the process of checking the business in detail before contracts are signed. It is one of the most important parts of buying a business, because it moves the deal from possibility to verification.

Due diligence covers more than many buyers expect.

A solicitor will review the legal side of the business, including key contracts, lease terms, employment issues, disputes, licences, regulatory matters, ownership of intellectual property and whether important assets are properly held by the seller. If the business trades from premises, the property arrangements need to be understood. If the business depends on brand value, software or specialist know-how, ownership and usage rights need to be checked carefully.
An accountant will review the financial side, including the accounts, tax position, liabilities, working capital, stock, debtors, creditors and cash flow. If the numbers presented at the start were too flattering, this is often the stage where the picture becomes clearer.
A valuer may need to revisit value if the due diligence findings show that the business is weaker, riskier or more dependent on the seller than first thought.

Sometimes due diligence confirms that the business is sound. Sometimes it reveals manageable issues.

Sometimes it shows that the opportunity is not what it first appeared to be. That does not always mean the deal should stop. It may mean the price needs to be revised, the deal needs to be restructured, or the contract needs stronger buyer protections. But this is exactly why due diligence matters.

It is also why a solicitor should already be involved by this stage. If legal due diligence only begins at the very end, important risks may be discovered too late.

Step 5 – Agreeing the commercial structure and heads of terms

Once the main risks are better understood, the next question is how the deal should be put together.

Two deals can have the same price and still be very different in practice. In one, the buyer may acquire the company and take on its history. In another, the buyer may acquire selected assets and leave certain liabilities behind. In one, the seller may stay on for a handover period. In another, the seller may leave immediately. In one, the price may all be paid on completion. In another, part may be deferred or linked to future performance.

These details are not technical side issues. They shape the risk.

This is the stage when heads of terms are often agreed. Heads of terms are not usually the final contract, but they set out the broad commercial framework of the deal. They can cover price, what is included, the expected timetable, confidentiality, exclusivity, and any conditions that need to be met before completion.

A solicitor will review or prepare heads of terms so that the structure reflects the buyer’s objectives from the start. This is also where the solicitor will begin shaping the legal protections in the purchase agreement.

Those protections may include:

Clear wording about what is included in the sale.
Clear wording about which liabilities stay with the seller.
Promises from the seller about the business and its financial information.
Protection if those promises turn out to be untrue.
Tax protection for historic liabilities.
Mechanisms such as retention, escrow or deferred payment where extra security is needed.

An accountant should advise on the tax and financial impact of the structure, particularly if there is deferred consideration, completion accounts or an earn-out.

This is often the stage where the quality of the transaction is decided. A well-structured deal can reduce risk significantly. A poorly structured one can store up problems for later.

Step 6 – Documenting the legal protections in the purchase agreement

This is the point where the legal detail becomes critical. Once the commercial shape of the deal is agreed, the purchase agreement is the document that turns it into a binding legal arrangement.

It should not simply record the agreed price. It should allocate risk clearly and deal with what happens if the business is not as described.

For a buyer, this is one of the most important jobs for the solicitor.

The purchase agreement should make clear:

Is it a share purchase or an asset purchase?
What exactly is being transferred?
What liabilities are being taken on and what stays with the seller?
What promises the seller is making about the business?
What protection the buyer has if those promises are wrong?
How the price is to be paid and adjusted, if necessary?
What needs to happen before and at completion?

If the concern is hidden liabilities or inaccurate financial information, this is the stage where the contract should include proper buyer protections. In plain terms, that may mean the seller giving clear written promises about the state of the business, with a route for the buyer to claim if important information later proves to be wrong. It may also mean specific protection for known risk areas, such as tax, disputes or unpaid liabilities.

An accountant often works alongside the solicitor here, particularly where there are completion accounts, working capital targets or tax issues built into the agreement.

This part of the process may be less visible than price negotiations, but it is often where the real protection lies.

Step 7 – Completion, handover and the first few weeks

At this stage, a solicitor will usually deal with completion documents, any necessary consents and post-completion formalities, while an accountant can help with the financial handover, including payroll, VAT and any completion accounts process.

However, for the new owner completion is not the end of the process. It is the start of a new phase.

Once the documents are signed and the deal completes, the business still needs to keep operating smoothly. Staff need reassurance. Customers and suppliers need clarity. Systems, records, passwords, contracts and key contacts all need to transfer in a controlled way.

A business that looked strong before completion can still struggle afterwards if the handover is poorly managed.

This is why handover planning matters. If too much depends on the seller’s memory, relationships or informal routines, the buyer can face disruption very quickly. The smoother the transfer of knowledge and day-to-day control, the better the chance of a stable start.

Final thoughts on buying a business

Finding the right business can feel like the breakthrough moment. But the success of the purchase usually depends on what happens next.

That means bringing in the right people at the right time.

A solicitor to help shape and protect the deal.
An accountant to test the financial reality.
A valuer to assess whether the price reflects the true worth of the business.

Above all, this is not a process to rush.

When buying a business, the right next step is rarely just “make an offer.” It is to investigate carefully, structure the deal properly, and make sure the legal and financial protections are in place before completion.

That is what turns early interest into a sound business acquisition.

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