Buying your first business

• Heads of terms. Before you sign anything, I check the price, structure, deferred payments and exclusivity period, because the heads of terms set the shape of the whole deal.
• Structure. Whether to buy the shares or the assets, and whether to buy personally, through your existing company or through a new holding company or SPV.
• Due diligence. Focused on what actually matters for the business you are buying, not a generic checklist, and scoped to your budget.
• The purchase agreement. Warranties, indemnities, how the price is adjusted at completion, deferred consideration and restrictive covenants on the seller. See the share purchase agreement and asset purchase agreement pages.
• Funding. Working with your lender, broker and accountant so that the funding and the legal documents fit together.
• Completion and after. Signing, payment, Companies House filings and the handover from the seller.

Most problems I see on first acquisitions are avoidable. The common ones are:

• Agreeing a fixed price with no adjustment for the cash, debt and working capital actually in the business at completion.
• Relying on a template agreement without proper warranties for the business being bought.
• Cutting due diligence to save cost, then finding the problem after completion.
• Paying everything on completion when part of the price could have been deferred and secured against claims.
• Not planning the handover with the seller, so customers and staff do not transfer smoothly.

I talk through these in my video on the biggest mistakes buyers make.

Many first acquisitions are not paid for in cash on day one. Seller finance, deferred consideration, earn-outs, bank lending and asset or invoice finance are all common, and each has legal consequences that are best dealt with before heads of terms are signed. My video on buying a business with little money down explains the main options, and the recent deals page shows how they worked on real transactions.

I quote a fixed fee for each deal before any work starts, wherever possible, based on its size and complexity. As a rule of thumb, for deals of £1m or more the fee is usually around 1% of the purchase price. For smaller deals I give you a fixed quote after a free initial call. The fees page sets out the starting prices and what is included, and more answers are on the buying and selling a business FAQs page.