Should I arrange finance before looking to purchase a business?
If you know that you’ll require a business loan or commercial mortgage in order to fund the purchase of a business, then finding out how much you can potentially borrow and what you can afford before you start researching businesses for sale will give you a clearer indication of the type of business that you’re looking for. Getting your finances in order early can also help to prevent disappointment should you find a business that you like, only to discover it is financially unobtainable.
Why do I need to sign an NDA in order to obtain sales particulars?
A non-disclosure agreement (NDA), also known as a confidentiality agreement (CA) or a confidentiality undertaking (CU) is simply a legal contract which requires the prospective buyer not to divulge or release information shared with them by the seller. The sales particulars of a business will often contain sensitive information which could pose a risk to the seller if it was discovered by a competitor or even by a member of the general public. This may include financial, trading, marketing, supplier or customer information. The signing of a nondisclosure agreement is simply the creation of a confidential relationship aimed at safeguarding the seller’s business.
I’ve received sales particulars of a business I’m interested in. What’s the next step?
Once you’ve found a business that interests you, we’ll then set up a meeting for you with the seller, so that you can have an open discussion and where applicable, view the business and accounts. Depending upon the type of business being sold, the seller may request the initial meeting to be arranged after usual trading hours or in some cases in a neutral location, away from customers and employees.
At what stage will I need to show proof of funds to the seller?
You will usually be required to provide proof of funds upon declaring any agreement or intent to purchase. To facilitate discussions, it’s therefore essential to ensure you have proof of funding or any ‘agreement in principle’ document from your lender by this stage. A buyer with funds in place will always be looked upon more favourably by a business seller, and it may also help negotiations in your favour, especially in situations where a seller has interest from a number of prospective buyers who are all at differing stages of financial progression.
How do I make an offer on a business for sale?
In order to make an offer on a business you wish to purchase, you will need to put your offer in writing (via email) to us here at Merrill Hays. Your offer should detail how much you are willing to pay for the business, your proposed timeframe, together with any particular 'conditions of sale', such as an agreed period of support that you may require from the seller, etc. Your expression of interest will be passed to the seller, who will then review your offer and respond accordingly. This will usually signal the commencement of negotiations.
What costs do I need to consider when buying a business?
This depends entirely upon the type of business that you’re purchasing and how the deal is being structured. However as a general guide, you will normally be paying initially for the assets of the business, the goodwill and in many cases, the premises (or the assignment of lease). You should factor in your professional fees (such as solicitors, accountants, surveyors etc), and you should also provision sufficient working capital in the initial months to cover any rent, utilities, staff wages or stock inventory.
What type of business would suit me best?
There may well be a range of different businesses that would be suitable for you. Perhaps you have an interest or specific experience working in a market sector that predisposes you to a particular kind of business. Consider your working requirements, interests, personality traits and skill sets; if you’re skilled and passionate about what you do, you’re far more likely to be successful in your chosen business.