Buying an established business is a good option for some aspiring entrepreneurs. Much of the groundwork for success may have already been done by the existing owners.
Before making an offer to buy a business there are some important things to investigate. Initially you may only have access to the business' sales memorandum. Sellers will usually ask you to sign a confidentiality undertaking or non-disclosure agreement before you can access sensitive or detailed information. They will usually also ask for details about you via a curriculum vitae (CV) and evidence of your ability to fund a purchase of the business.
After an offer to buy the business is made and accepted, due diligence is carried out. This is where the buyer looks at the business in detail, including its finances, its employees, outstanding litigation, major contracts, IT infrastructure and other technology.
You can do some of the research yourself. You should also seek expert advice as professionals such as accountants, solicitors, chartered surveyors, business transfer agents, business brokers and corporate financiers can help you research and analyse the company information prior to buying a business.
This guide takes you through the steps of researching a business, including legal and financial checks you should carry out and how to assess its assets.