Buying a Business
Dawson Radford Solicitors brings you 5 expert tips on a business law topic. Nothing too technical, but a chance for you to gain expert knowledge in a subject that interests you.
This week it’s 5 expert tips on “Buying a Business”
- What are you buying?
This may sound obvious, but a lot of people embark on a purchase without really knowing. Are you buying a company, or are you buying assets? Is there a particular method of transferring particular assets? Eg. Intellectual Property. Make sure you and the Seller are absolutely clear on what is included in the price, and what isn’t to avoid confusion further down the line.
- Deal with employees properly
It is a misconception that new business owners don’t have to take on staff – they do! The Transfer of Undertakings (Protection of Employees) Regulations 2006 apply to a transfer of a going concern with the effect that an employee automatically transfers to a buyer on the same terms and conditions of employment.
- Do your homework
If this is a new sector you are entering, do your research. Who do you need to talk to, form relationships with, who are your customers, suppliers and competitors. If it’s an addition to your existing business what savings can you make on day 1? Where are the synergies?
- If you need to borrow, get your house in order
If you need to approach a bank or other lender, prepare to have your existing business and finances scrutinised. If there are issues, then don’t expect a bank to lend you further funds to take on more. Make sure your existing finances are in the best possible condition and your business is operating in accordance with the law and in an organised manner before even approaching the bank – they will check!
- Have a plan
Who is going to run the business immediately after completion? If the sellers were the operators, do you need them to stay on for a handover period? If you are going to run it do you have the time to split yourself between your existing business and the new one? If the operator needs a particular registration or qualification do you have that person? Nothing unnerves a seller more than leaving “their baby” with someone who hasn’t thought about this.