FAQs

Buying a business involves acquiring either:

• The shares in a company (taking ownership of the entire business), or
• The assets of a business (such as equipment, contracts, and goodwill)

In practice:
If you buy all the shares in a company, you take over everything—including any existing debts or liabilities. In an asset purchase, you can choose which parts of the business to take on.

Due diligence is the process of investigating the business before you complete the purchase. This helps uncover risks and verify what you are buying.

This may include reviewing:

• Financial records
• Customer contracts
• Employment arrangements
• Any legal disputes or liabilities

In practice:
If due diligence reveals that a key client contract is about to end, you may renegotiate the price or reconsider the purchase.

Key documents typically include:

• Heads of terms (non-binding summary of the deal)
• Sale and Purchase Agreement (SPA)
• Disclosure letter
• Supporting documents (e.g. assignments of contracts, employment transfers)

In practice:
The SPA will set out key protections for you as the buyer, including warranties and indemnities from the seller.

• Warranties are statements made by the seller about the business (e.g. accounts are accurate)
• Indemnities provide specific protection against known risks (e.g. ongoing disputes or tax issues)

In practice:
If the seller states there are no outstanding legal claims but one exists, you may be able to bring a claim for breach of warranty and recover your losses.

Once the deal completes:

• Ownership transfers to you
• You take control of the business operations
• You must comply with any ongoing obligations under the agreement

In practice:
You may need to integrate staff, notify customers, and ensure contracts are properly transferred following completion.