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 such as external funders or landlords of business premises.

What do I need to do?

As a seller a great deal of information about the business is often 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 organise funding. Also if it is a new business, start up registration with HMRC will be needed as well as 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 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, such as loan arrangement fees for the buyer and landlord's costs if consent is required under a lease.

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, an application is made to the landlord e.g. for consent to assign a lease.

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

The completion itself will involve payment of the monies due at that time and the handing over of whatever assets have been agreed to be sold as well as keys to business premises. A stocktake 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, such as 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)

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