Buying and selling a business FAQ

How long does it take?

Once the main terms are agreed it can be done within a matter of days in the case of a straightforward transaction but more likely you should expect it to take 4-6 weeks particularly when other parties will be involved e.g. external funders or landlords of business premises.

What do I need to do?

As a seller there can often be a great deal of information about the business which is required and the sooner this exercise is carried out the better. Please see our detailed checklist on our “Buying and Selling a Business” page.

Buyers may need to obtain references in connection with lease assignments or sub lettings, arrange surveys and organize funding. Also if it is a new business start up registration with HMRC will be needed and possibly a new company formation.

What about employees?

Dealing with employees’ contracts is a very important aspect of a business transfer and both sellers and buyers need to be aware of their responsibilities under TUPE; the seller in particular will need to conduct consultations and the buyer will also be involved in this process too.

What about costs?

As well as the legal fees for both buyer and seller there may well be other third party costs which will need to be paid e.g. the landlord’s costs if consents are required under a lease or loan arrangement fees for the buyer.

What is involved in the legal process?

Once the main terms are agreed then either the seller’s or the buyer’s solicitors will prepare the draft contract for approval. This is then negotiated and in the meantime preliminary enquiries are raised by the buyer’s solicitors and searches carried out. Also if relevant application is made to the landlord eg for consent to assign a lease.

Sometimes contracts are exchanged prior to completion and deposits paid and sometimes at the same time depending on the parties requirements and if certain conditions need to be fulfilled.

The completion itself will involve payment of the monies which are payable at that time and the handing over of whatever assets have been agreed to be sold as well as keys to business premises. A stock take may also be needed on the day.

What about after completion?

A seller is often asked to stay on as a consultant to help with the transfer of ownership, introductions to customers etc…

There may be apportionments of outgoings such as salaries etc to sort out and possibly completion accounts to prepare

Notifications to third parties will probably need to be made e.g. to employees, customers and sometimes debtors.

There may be legal formalities to attend to on the property side or if any intellectual property has been assigned (e.g. a trade mark)