Buy a Business FAQs

Q. Why is the business being sold?

There are many reasons why someone would be selling their business. Many people are looking to simply retire or move on to a new venture with their businesses in perfectly good health. Sometimes there will be disagreements between owners or other difficulties that the owners are having. Your Intelligent Business Partners agent will always be able to let you know the exact reasoning for the sale so that you can make an informed decision.

Q. What is being sold?

What you are buying depends on the legal form of the business. If you are looking at business that is operated by a partnership or sole trader, you are typically buying the assets only. When purchasing a limited company you will usually acquire a business that has obligations and liabilities, such as debts and contracts, as well as the assets.

Q. How has the business been valued?

Fundamentally the valuation of a business is based on how much profit a buyer could expect to make from the business. The valuation process we undertake considers a wide variety of important factors including location, earnings ratio, turnover, customer base (goodwill) and the seller’s motivation.

Q. What due diligence should I undertake?

Following the signing of the purchase (often referred to as the ‘heads of terms’) you will need to carry out comprehensive due diligence to ensure that you are making a sound investment. By signing the letter the seller has agreed to open up his business for your assessment. Due diligence is the most critical stage of the buying process. A comprehensive review of the business will give you the peace of mind to continue with the purchase.

Q. What is the difference between a leasehold and freehold business?

If you purchase a freehold business you will own both the business and the property. Whereas a leasehold business will consist of the business and the fixtures only, along with the right to occupy the premises for a period of time with an agreed rent.

Q. What are the A classifications I see next to businesses?

Businesses are granted usage permissions by the local authority. These categories include: • A1 Retail use • A2 Professional and financial services • A3 Hot food restaurants • A4 Licensed premises • A5 Takeaway

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