Buying a business to grow your own

The first decision is which company does the buying: your existing trading company, a new holding company above it, or a separate SPV. The answer affects funding, lender security, tax and how easily the next acquisition can be added to the group. I set out the options with your accountant before heads of terms are signed.

Because you already understand the trade, due diligence can usually be focused on the legal points that carry risk: customer and supplier contracts that end or change on a change of control, employees and any TUPE transfer, premises, licences and registrations, and any disputes. That keeps the cost down without leaving gaps.

• Restrictive covenants so the seller cannot compete for customers or staff.
• A defined handover period with introductions to key customers and suppliers.
• Deferred consideration, clawbacks or earn-outs tied to the customers or revenue actually retained.
• Warranties and indemnities, with the right to set claims off against deferred payments.

Several clients come back for their next deal. Where a structure has worked once, such as a clawback tied to retained landlords on a lettings agency purchase, we can repeat it, which saves time and cost. See the recent deals for examples, and the business purchase solicitor page for how I run an acquisition.