The above comments on the steps involved in selling a business also apply to buying a business though, of course, you will be on the “other side” of the transaction.
Perhaps the most crucial stage in the purchase of a business is the due diligence stage. Your solicitors will raise a broad range of enquiries relating to the business you are purchasing. Particularly useful enquires relate to the trading history of the business and its finances, the assets of the business and whether the business is exposed to any potential or ongoing litigation claims. Your solicitor will prepare a report for you to consider relating to the seller’s legal due diligence responses and your accountant will similarly prepare a report on the financial responses for your consideration.
The detail of the due diligence enquiries and reports will depend on your prior knowledge of the business. If you have worked in the business for a long number of years and are familiar with its runnings, it is likely that the due diligence process can be dispensed with.
The due diligence reports put you in a far better position to determine whether to proceed with the purchase as agreed or if further negotiation is required around the price or to ensure certain issues are resolved before completion of your purchase.