What to do before buying a business
When setting out to buy a business, there are tasks you can complete and things you can do to speed up the process. A buyer who’s ready to proceed and prepared is highly appealing to business sellers, as this shows they’re serious about buying. If two bids clash and the seller must choose between potential buyers, the proceedable buyer that poses less risk will be successful.
Preparation is key when buying a business, as this can save substantial time and set you apart from other buyers.
How to prepare to buy a business
When starting the search for a business, prepare so that when the business you wish to acquire enters the market, you’re purchase-ready and can act with speed. Preparing the relevant documents in advance means you can pay attention to detail and search for the best rates as you have the luxury of time.
Here's a step-by-step guide on how to prepare to buy a business.
Refine your search – Research the marketplace to gain an understanding of the average sale price and market trends. Refine your search accordingly so you’re always viewing businesses for sale that meet your criteria. Establish your non-negotiables, such as maximum budget, your negotiables, such as property tenure type, and your ‘nice to haves’, such as fixtures and fittings.
Due diligence – When expressing your interest or submitting an offer, due diligence will be conducted to verify your identity and qualify your position as a buyer. An identity check will be conducted and proof of funds requested. If you’re seeking business finance, an agreement in principle may be required to show eligibility.
Once the sale progresses, anti-money laundering checks are performed and the seller may conduct their own background checks.
Digital presence – A quick and free way to perform a background and character check on a potential buyer is to assess their digital presence. From your social media accounts to content published under your byline, your digital presence reflects you, so ensure this is moderated.
Business finance – If you’re taking out business finance to buy a business, find a competitive lender and secure an agreement in principle. This is required when submitting an offer, as this shows a lender’s willingness to lend you money.
Legal representation – You’ll need a solicitor to handle the legal side of the business sale, so have a solicitor on standby before searching for a business. Get a checklist of what information they require so you can appoint them without delay once an offer is accepted.
Scope for negotiation – Every business deal comes with negotiations, either on price, fixtures, fittings, handover and/or post-sale support. Understand the degree of flexibility you’re happy to extend before entering negotiations, as this can otherwise thwart your plans.
Business plan – Some business owners will sell their business to cash out on their investment, while some may sell due to inevitable circumstances, such as retirement or illness. Prepare a loose business plan to share with the business seller, if requested, to reassure them of your best interests. This can prove valuable when choosing between potential buyers.
These are the standard requirements when preparing to sell a business.
How can Selling My Business help?
For more information on how to prepare as a business buyer, read our useful insights for buyers or reach out to a member of the Selling My Business team.
Over our 60 years in the industry, we have sold over 12,000 businesses and established a database of around 10,000 potential buyers. We have extensive market reach as our businesses for sale are listed on our online marketplace and we also market our businesses for sale across popular business selling platforms.
