Sale and purchase process

Knowing what is involved in the sale and purchase of a business from start to finish will help you (whether you are a seller or buyer) to understand the procedures and processes involved and give you an idea of the likely timescales. It will also help you to prepare yourself and the business in the best possible way. Anticipating the next move and being ready to ask/answer questions will be of benefit. The points below provide a brief summary of what is typically involved:

Finding the right business and buyer

If you are selling your business, consider how best to attract buyers to it. This not only relates to preparing the business for sale in the first place but also what marketing activities will produce the best results. Buyers should consider the market carefully and avoid getting side-tracked on a business that may look like an attractive proposition but which does not fulfil the buyer’s requirements.  Both the seller and buyer should consider the reasons for the sale/purchase, what type of sale/purchase they wish to proceed with and their overall goals.  Identify the target buyer/business, contact agents and prepare thoroughly. Take time to ensure all decisions are the best for you.

Confidentiality agreement

Before disclosing confidential information relating to your business, a seller should make sure that there a confidentiality agreement is entered into with prospective buyers for protection. This is often put in place at the outset of any negotiations but if not, be sure to raise the issue before handing over key information!


Negotiating the deal is obviously a key part of the process. This will include terms relating to price and when payment will be made, what type of sale/purchase it will be, the structure and what the other provisions should be addressed. When this is finalised it is usual for Heads of Terms to be prepared setting those terms out so all parties are clear as to what is intended.

Advice: legal, financial, valuation, marketing or otherwise

Take advice at an early stage on all aspects of the transaction (preferably from those with experience of these types of matters) to ensure you are well prepared and know what to expect – time and money invested at the beginning can result in savings at the end.


If finance is required to move the transaction forward, look at funding options and make sure the terms suit your circumstances, are available and affordable. Build in sufficient time during the process for the finance to be put in place. Due diligence and consideration of documents

This is the fact finding and investigation stage. A careful and thorough due diligence exercise is imperative. It will reveal information about the business accounts, assets, contracts, properties, insurances, etc. A buyer will want to obtain as much information as possible about the business so there are no hidden surprises. A buyer will also want to check the terms of the documentation to not only ensure that assets/contracts can be transferred to the buyer as part of the process, but also to ensure they have full knowledge of the obligations which will need to be fulfilled following completion of the  acquisition. A seller should have all business paperwork, etc in good order to assist with the disclosure.

Searches and enquiries

If, for example, assets of the business to be acquired comprise properties, it is not unusual for searches to be carried out in respect of those. These would be in addition to normal enquiries that would be raised about the properties as part of the acquisition process. Of course, any questions that arise as part of the due diligence exercise can be asked and particular enquiries raised dealing with the specific business in question. It is all about getting as much information as possible prior to the buyer committing to the purchase. As mentioned above, from a seller’s perspective it is important to have all paperwork, etc in good order so that replies can be provided with supporting documentation when required.

Sale and purchase agreement

To proceed with the sale and purchase, an agreement will be prepared. This will incorporate provisions about the agreed terms. For example, it will identify the parties, what is being sold/purchased, what the timings are, how much is being paid and when, set out any restrictive covenants and/or non-competition clauses, include confidentiality provisions and detail the warranties (i.e. assurances by the seller about the business) to be given to the buyer. It is likely to take a bit of time to get the agreement in a finalised form so as to suit the interests of both parties. When agreed, the document is circulated for signature in readiness for exchange and completion.

Ancillary documents

In addition to the sale and purchase agreement, it is likely that supplemental and ancillary documents will be required to effect the sale and purchase. Typical examples include a deed confirming the transfer of the goodwill of the business, deeds to confirm the transfer of properties to the buyer (which may need to include consent documentation from a landlord – known as a licence to assign), legal charges securing financial arrangements, new service/employment contracts that may be entered into, and other guarantees and papers that relate to the matter as a whole. Obviously this list is not exhaustive and the type and nature of the ancillary documents will depend on the terms of each particular matter. Again, it is likely to take time to negotiate and agree these additional documents so as to strike a balance between the interests of the buyer and the seller.


The buyer and seller should review the documentation involved as part of the sale and purchase and consider the terms of any reports accompanying them. If there are any queries or things are not clear, it is important to ask questions or say something – know and understand what you are committing to before it is too late.

Finalising, signing and moving to exchange and completion

When documents are approved and agreed, finalised versions are prepared and circulated for signature. When the signed versions are held (usually by the solicitors acting on behalf of the buyer and the seller) with all appropriate funding arrangements in place, the agreement will be exchanged with completion set for an agreed date in the future, or possibly on the same day. This is the point at which the parties commit themselves to the transaction and a failure to complete afterwards is likely to have serious consequences.

The future

The buyer will be responsible for the business/assets acquired from the date of completion. There may be outstanding obligations for the seller and buyer to perform as part of the sale and purchase agreement but principally the buyer’s main focus will now be on taking the business forward.


Naturally the above only represents a general overview of the various stages involved in the sale and purchase of a business. Much will depend on the individual circumstances of each transaction. What is important, however, is that you have as much information as possible about how matters will progress so that nothing comes as a surprise and you can be realistic with your expectations.

Please note that the information in this article is not designed to provide legal or other advice or create a solicitor - client relationship. No liability is accepted for any loss caused in reliance upon its content and you should not take or refrain from taking action based upon the same.