WHAT HELP AND ADVICE DO YOU NEED?
For most business purchases you will need:-
- An accountant or business advisor – to help you assess the opportunity; draw up a business plan and cash-flow projections and to assist you in choosing your vehicle for purchase (i.e. limited company, sole practitioner etc.).
- A solicitor – essential to protect your interests when purchasing the assets or shares of a going concern and to ensure that you do not inherit any liabilities from the previous owner’s historic trading activities, or dealings with employees. A solicitor will normally also ensure that the contract prohibits the outgoing owner from competing within a specified radius of the business.
- Surveyor – A necessity in most cases for purchases buying both freehold and leasehold businesses. Buyers taking on a lease rather than a freehold often do not realize that in most instances it is just as important for them to commission a survey due to repairing obligations within the terms of most leases
Choosing the right professional advisors
When buying a new flat screen television or other high priced luxury good, most people spend a significant amount of time comparing specifications, makes, models and options to allow them to make the best and most informed decision. It is therefore something of a mystery to us why people make such poorly researched decision when choosing professional advice when undertaking a business purchase when the professional advice is liable to cost them several thousand pounds?!
Far too many people choose their lawyers or accountants because of some vague family connection or on the recommendation of a friend or acquaintance, without ever looking into the true costs or credentials.
The classic mistake is to automatically opt for the traditional family lawyer who perhaps previously acted for you and/or one or more family members on a house sale or purchase. Buying a business is a completely different legal disciple and to put this into some sort of context, is comparable to going to your optician to get a root canal drilled and may well prove just as painful!
First City Business Brokers will be happy to provide suitable recommendations on request, but if you wish to source your advisors independently there are several common sense ‘tests’ that you can apply to ascertain the suitability of advisors being considered:-
1) Ask questions about the level of experience with business purchases commensurate with the business you are planning to buy. Ask if you can speak directly to any existing or previous clients they have acted for to give you real references.
2) Manner & communication – it is important that you choice of lawyer and accountant are good communicators and that they do not ‘blind you with science’. Follow you gut instinct and choose suitable advisors who you fell you will be able to get along with, speak plain English and return calls within acceptable timescales.
3) Do not always go for the cheapest quote – most lawyers work on an hourly rate rather than a fixed fee basis and final bills are often far higher than initial costs – beware of artificially low quotes.
4) For lawyers – check whether they are primarily office based. Solicitors with dual specialisms such as advocacy/crime may frequently in court. This means that they may be difficult to get hold of and in protracted criminal cases – their other commitments could add weeks or months to the purchase time – potentially upsetting the vendor and the associated transfer of goodwill.
If you are serious about buying, it is worth selecting your advisors as soon as possible, so that you can move quickly if the right business opportunity arises. Having your advisors already in place when you make an offer will make you look more credible to business vendors and may improve your chances of success.
