Is it a wise idea to have experience running a company before buying someone else's business?

[SEO Lady]

My question is, has anyone not had a clue about running a business, bought a ready-made business? Not online per se, a local services business with equipment, stock, digital assets/website and socials included?

Let's say you make blue widgets and you've seen an advert for a UK business who is selling as a going concern. It's within 40 minutes commute, another widget manufacturer, but in orange. The orange widget business owner has 10 years of trading orders and accounts, and you contact them to have a coffee.

It's looking good. A family company, now retiring, and the business model could be packed up and relocated anywhere else in the UK. Everything is included.

What's the least amount of time that everything can be agreed, contracts drawn up, handed over? Are we talking weeks - or months because of the solicitors fees?

If anyone has taken this gigantic step and has found their way to this post, I'd love to hear about your journey. Or maybe you are an Orange widget man?

 

[pentel]

Is the company making / selling orange widgets a limited company or sole trader / partnership?

 

[SEO Lady]

I have no idea, I'm interested in people who have bought a business and how long it takes the legal process bearing in mind the UK legal system can often have delays

 

[Clinton]

It can happen in 24 hours. I've bought businesses within 24 hours.

However, I know what I'm doing and have done it numerous times before.

Someone who doesn't know what they're doing is best getting external assistance on due diligence (DD) because they just do not have the expertise to dig into the accounts, the operations, the legalities.

They've also got to find a good accountant to assist with all the calculations, to advise them on whether to buy shares or assets, merits of cash-free-debt-free or alternative, calculate working capital requirements, advise on locked box vs completion accounts mechanisms and tons more.

You mention selling "as a going concern". Do you even know what that means, how this asset sale impacts on the business and how social media accounts, Amazon/eBay accounts and other assets of the business ie these cannot be transfered (and if the business has subscribers, all subscribers will be lost and you'll have to sign them up individually to a new provider)?

Then when this buyer has done the DD, they've got to find a good lawyer to draw up the sale agreement. Finding a good lawyer can take a while in itself, it's not just a matter of making a phone call or two.

When the lawyer is appointed, the lawyer will liaise with the other side's lawyer to draw up terms. The average Share Purchase Agreement is in excess of 60 pages in length and it can take the lawyers a few weeks to thrash it out. They are usually very slow in this and some need frequent kicks up the backside. Delays here can delay completion and require the whole deal to be renegotiated as the numbers/accounts have moved on.

The completion itself can get delayed for all manner of reasons. And after paying the accountant and lawyer and everyone else, it may turn out that there's a major flaw in the business, or a major risk, that makes the whole acquisition not viable. At that point, the client needs to decide whether to go ahead or ...lick his wounds, write off all the lost money and start again.

I have no idea, I'm interested in people who have bought a business and how long it takes the legal process bearing in mind the UK legal system can often have delays

There is no "legal system" involved. Transfer of shares happens via a simple form. Your entire OP and terminology shrieks complete novice (and that's bad. Really bad). Seriously, go get expert assistance if you're thinking of buying a business!

 

[SEO Lady]

Thank you for your time @Clinton it's genuinely appreciated.

This is not for me, I was asked the question last week. There's no point asking GPT asking for help hence this post. I couldn't advise and when I read the UKBF article on 'Selling your business' I asked the person to start with an information memorandum (IM).

My brain cogs were turning and then I sent the article over as it's not my remit. I build businesses as an SEO, not sell them. There's no point in me learning how to help someone else if I'm spending hours researching when they need to learn.

I'll forward your response over and once again thank you for the time it's spent to type all those words out.

 

[SEO Lady]

It can happen in 24 hours. I've bought businesses within 24 hours.

However, I know what I'm doing and have done it numerous times before.

Someone who doesn't know what they're doing is best getting external assistance on due diligence (DD) because they just do not have the expertise to dig into the accounts, the operations, the legalities.

They've also got to find a good accountant to assist with all the calculations, to advise them on whether to buy shares or assets, merits of cash-free-debt-free or alternative, calculate working capital requirements, advise on locked box vs completion accounts mechanisms and tons more.

You mention selling "as a going concern". Do you even know what that means, how this asset sale impacts on the business and how social media accounts, Amazon/eBay accounts and other assets of the business ie these cannot be transfered (and if the business has subscribers, all subscribers will be lost and you'll have to sign them up individually to a new provider)?

Then when this buyer has done the DD, they've got to find a good lawyer to draw up the sale agreement. Finding a good lawyer can take a while in itself, it's not just a matter of making a phone call or two.

When the lawyer is appointed, the lawyer will liaise with the other side's lawyer to draw up terms. The average Share Purchase Agreement is in excess of 60 pages in length and it can take the lawyers a few weeks to thrash it out. They are usually very slow in this and some need frequent kicks up the backside. Delays here can delay completion and require the whole deal to be renegotiated as the numbers/accounts have moved on.

The completion itself can get delayed for all manner of reasons. And after paying the accountant and lawyer and everyone else, it may turn out that there's a major flaw in the business, or a major risk, that makes the whole acquisition not viable. At that point, the client needs to decide whether to go ahead or ...lick his wounds, write off all the lost money and start again.


There is no "legal system" involved. Transfer of shares happens via a simple form. Your entire OP and terminology shrieks complete novice (and that's bad. Really bad). Seriously, go get expert assistance if you're thinking of buying a business!

Also, it's not an eCom it's a local services company with a unique asset that's the envy of all the other local businesses offering the same service.

There's no stores, the assets are the website .. which of course is ranking at the top of Google page 1 their Facebook page is the other. The FB profile also has been built up with years of content as part of my role. So, it would be a share transfer thing that they need to understand - I know a little about that myself but that is simple to understand in theory with the Companies House documentation.

Please accept this as a Thursday treat:

 

[fisicx]

That FB page will disappear as it’s linked to a personal FB page. You can’t transfer it to someone else.

 

[Mark T Jones]

From a buyer perspective, the first thing to do is strip out all hype and superlative and focus on hard, verifiable, numbers and facts.

 

[WaveJumper]

Get your friend to go work in the business for six months if the owner has nothing to hide they will soon get a feel for its real worth worts and all

 

[Clinton]

the assets are the website .. which of course is ranking at the top of Google page 1...

That's most unfortunate!

Vendors, for some reason, think that good SEO / good SERPs performance is an advantage when they're selling the business.

Strange people, vendors.

Even stranger are the buyers who don't know better and don't take professional advice before investing.

... their Facebook page is the other.

Oh, crap!

 

[Nudge]

My question is, has anyone not had a clue about running a business, bought a ready-made business? Not online per se, a local services business with equipment, stock, digital assets/website and socials included?

Let's say you make blue widgets and you've seen an advert for a UK business who is selling as a going concern. It's within 40 minutes commute, another widget manufacturer, but in orange. The orange widget business owner has 10 years of trading orders and accounts, and you contact them to have a coffee.

It's looking good. A family company, now retiring, and the business model could be packed up and relocated anywhere else in the UK. Everything is included.

What's the least amount of time that everything can be agreed, contracts drawn up, handed over? Are we talking weeks - or months because of the solicitors fees?

If anyone has taken this gigantic step and has found their way to this post, I'd love to hear about your journey. Or maybe you are an Orange widget man?

I’ve seen people step into running a business this way, and it’s always a mix of excitement and a steep learning curve. The timeline really depends—some deals move quickly, especially if both parties are motivated, but legal processes can slow things down. Even after contracts are signed, there’s still a transition period where you’re figuring out operations, meeting suppliers, and getting a feel for how everything runs day to day.

 

[ethical PR]

I have no idea, I'm interested in people who have bought a business and how long it takes the legal process bearing in mind the UK legal system can often have delays

Obviously this is a how long is a piece of string question. It depends on the businesss, size and complexity of the business, is it regulated etc. Speak to your solicitor and accountant and along with your own research that will give you an idea .

 

[Ozzy]

What's the least amount of time that everything can be agreed, contracts drawn up, handed over? Are we talking weeks - or months because of the solicitors fees?

Exactly as mentioned above; it depends.

If a business has all its governance in order, MI watertight, and passes due diligence, then it can take weeks.

I've sold a business for 6 figures, which was completed after the initial chat, due diligence, and a handover in a few weeks. I've also gone through a sale of 7 figures, which took about 9-10 months. I would suggest it depends very much on the seller more than the buyer, and how prepared for the sale process the seller is.

 

[DoolallyTap]

My question is, has anyone not had a clue about running a business, bought a ready-made business? d?

Let's say you make blue widgets and you've seen an advert for a UK business who is selling as a going concern.

If you are already making blue widgets you will have experience of running a business so the this seems contradictory.
All the advice seems good although the cost of the business may affect some of the proposals.

 

[Chris Ashdown]

My question is, has anyone not had a clue about running a business, bought a ready-made business?

If the new owner has as stated no experience there will be much to learn which takes time, A 2-3 month handover and training period working with the old owner full time would be a good starting point to learn the basics and stand a good chance of succeeding. there is so much to learn ranging from stock, consumer act, buying, selling, running a website, accounting, employment law and marketing to name a few

 

[Paul Kelly ICHYB]

Having helped and spoken to may people in the same position, sadly, many of these businesses fail.

• Not everyone is cut out to run a business and finding this out after you have splurged your life savings out on it is a costly lesson to learn
• Some people do not realise the effort and time it takes to start and grow a business
• Good sales people do not always make good managers
• Too many people do not do the basic diligence
• Starting or taking over a business 'because it has always been a dream' (think pub, restaurant, bats etc) normally ends up being a nightmare.

Knowledge & experience in a sector increase the chance of success/reduces the chance of failure dramatically.