How to buy a business in the UK: a step-by-step guide

To buy a UK business, you find a target, value it, agree heads of terms, run due diligence, choose a share or asset purchase, fund the deal and complete. This guide takes limited company directors through each step, the taxes and costs, and how manda, iwoca's M&A service, can help.

Manda, iwoca's mergers and acquisitions service, works with UK small businesses typically valued between £500k and £10m. It targets three to six months from mandate to a signed letter of intent, and buyers search for free. (Source: manda by iwoca, checked October 2026.)

‍

The steps to buy a business

Buying a UK business follows seven steps, and each one shapes the next. You'll usually want a solicitor and an accountant involved from the offer stage onwards.

1. Decide what to buy. Pick the sector, size, location and role you want, and set a budget.
2. Find a business. Search listing sites and brokers, approach owners directly or use a matching service such as manda.
3. Value it. Work out what the business is worth to you before you talk price.
4. Make an offer. Sign a non-disclosure agreement, then agree heads of terms and a period of exclusivity.
5. Run due diligence. Check the accounts, tax, contracts, staff and legal position.
6. Agree the structure and funding. Choose a share or asset purchase and put the money in place.
7. Complete and hand over. Sign the sale agreement, pay, take ownership and settle in.

‍

Is buying a business right for you?

Buying an existing business gets you customers, staff and a trading record from day one. You also take on its problems, and you pay upfront for goodwill that a start-up would build over time.

Before you start searching, decide:

• Sector, size and location. Include any licences or regulation the business needs.
• Your role. Will you run it day to day, or put a manager in?
• Your budget. Set an ideal price and a ceiling, with room for fees and working capital.
• Your goal. Are you buying to keep and grow, or to build and sell?
• The fit. Which of your skills and contacts carry over, and which gaps would you need to fill?

If you already run a limited company, buying a competitor or supplier can be a quicker way to add customers and capability than building them yourself. Integration still takes time and money, so budget for systems, staff and culture.

‍

Where to find a business for sale

You can search listing sites, use a broker, approach owners directly or use a mergers and acquisitions service such as manda. manda introduces buyers to businesses that aren't publicly listed.

manda's service for buyers works differently from a listing site. For now, iwoca's team matches buyers with sellers, facilitates offers and manages the deal process; an open marketplace is planned. You tell manda what you're looking for and show you can fund it. manda then introduces businesses whose financials have already been checked using iwoca's lending data.

If you want to buy the business you work in, a management buyout lets you and other managers buy it from the owner. Stephen Murray funded his management buyout of ECF Accident Repair Group with an iwoca loan:

It was so simple compared to the hoops I've had to jump through with private equity in the past. The iwoca deal was quick and no stress. — Stephen Murray, Managing Director, ECF Accident Repair Group

‍

How to value a business

Most small businesses are valued as a multiple of their profit, against their net assets or on forecast cash flow. Buyers and sellers often use more than one method and ask an accountant to test the numbers.

Adjust the profit figure before you apply a multiple. Strip out one-off costs, the owner's personal spending and any owner's salary that doesn't match what you'd pay a manager. The multiple is where most of the negotiation happens, so ask how the seller arrived at theirs.

The gap between asset value and price is usually goodwill: customer relationships, brand and reputation. On manda, sellers' financials are written up into business reports with realistic valuation ranges before buyers see them. For a fuller walk-through of each method, read how to value your small business.

‍

Making an offer: NDA, heads of terms and exclusivity

Buying a business starts with establishing trust and agreeing the broad terms of the deal before committing to the time and cost of detailed due diligence. The early stages set the ground rules for sharing sensitive information, negotiating the deal and protecting both sides while the finer details are worked through.

You should sign a non-disclosure agreement to see the detailed numbers, then agree heads of terms setting out the price, structure and conditions. Heads of terms are mostly not legally binding, but the exclusivity and confidentiality clauses usually are.

• Non-disclosure agreement. It protects what the seller shares with you. Stay discreet, because staff and customers may not know the business is for sale.
• Heads of terms. They set out the price, how it's paid (upfront, later or through an earn-out), what's included and the conditions you need met before completion.
• Exclusivity. The seller agrees not to talk to other buyers while you run due diligence. If one side pulls out, the other may be able to claim some legal costs.

Have your solicitor read the heads of terms before you sign. On manda, buyers pay nothing to register or browse. A fixed commitment fee applies once your heads of terms are accepted and you enter exclusivity, and a success fee is due when the deal completes.

‍

Due diligence: what to check before you commit

Due diligence tests whether the business is what the seller says it is: its accounts, tax, contracts, staff, assets and legal position. A solicitor and an accountant usually lead it, with specialists for property or regulation.

‍

Financial and tax checks

• Profit and loss, balance sheet, cash flow and forecasts, matched to bank statements.
• Tax filings and payments, including VAT and payroll.
• How much revenue depends on a few customers, and how seasonal it is.
• Existing debt, guarantees and charges over assets.

‍

Commercial and operational checks

• Key customer and supplier contracts, and how easily they could end.
• Staff contracts, turnover and any people the business can't run without.
• The condition of premises, equipment and stock.
• Systems, processes and any regulation the business must meet.

‍

Legal checks

• Who owns the company and its assets, including intellectual property.
• Leases, licences and permits, and whether they transfer.
• Any disputes, claims or regulatory breaches.

‍

Who you'll need

• A corporate solicitor for legal due diligence, the sale agreement and the warranties and indemnities that protect you.
• An accountant or tax adviser for financial and tax due diligence and the deal structure.
• A broker or corporate finance adviser if you want help finding, valuing or negotiating.
• A surveyor if property is included.

On manda, sellers' financials are checked before you see them, and transaction managers coordinate the paperwork, data room and legal process.

Use what you find. You can renegotiate the price, ask for extra warranties or indemnities, or walk away.

‍

Share purchase or asset purchase?

In a share purchase you buy the company itself, with all its history and liabilities. In an asset purchase you buy chosen assets and leave the company with the seller. The choice changes stamp duty, VAT and what happens to staff.

‍

Stamp duty on a share purchase

You pay stamp duty of 0.5% when you buy shares using a stock transfer form and the transaction is over £1,000 (Tax when you buy shares on gov.uk). For example, buying a company's shares for £500,000 means £2,500 in stamp duty.

‍

Stamp Duty Land Tax on an asset purchase

If an asset purchase includes commercial property in England or Northern Ireland, you pay Stamp Duty Land Tax (SDLT) on the property's price. There's nothing to pay up to £150,000, then 2% on the next £100,000 and 5% above £250,000 (SDLT non-residential rates on gov.uk).

Gov.uk's own example: a freehold commercial property bought for £275,000 has SDLT of £3,250. That's nothing on the first £150,000, £2,000 on the next £100,000 and £1,250 on the final £25,000. Scotland and Wales have their own property taxes.

‍

VAT and the transfer of a going concern

Selling a business's assets would normally attract VAT. No VAT is charged if the sale counts as a transfer of a going concern. The assets must be able to run as a business on their own, and you must carry on the same kind of business (HMRC VAT Notice 700/9 on gov.uk). Other conditions apply, so check with your accountant.

‍

What happens to employees

In an asset purchase, TUPE usually moves staff to you on their existing terms, with their length of service kept. TUPE is short for the Transfer of Undertakings (Protection of Employment) regulations (Business transfers, takeovers and TUPE on gov.uk). Both the old and new employer must inform and consult staff. In a share purchase the employer doesn't change, so staff stay with the company.

‍

Buying through a limited company

Many buyers make the purchase through a limited company rather than in their own name. That can be the company you already run, or a new holding company set up for the deal. The tax effects depend on your situation, so take advice before you choose. If you need a new one, here's how to set up a limited company.

‍

How much money do you need to buy a business?

You'll need enough budget to cover the purchase price, plus professional fees, any stamp duty and enough working capital to run the business after completion. Buying with none of your own money is hard, because lenders and sellers usually want you to share the risk.

Your budget should cover:

• The price, and how much of it is due upfront.
• Legal, accounting and due diligence fees.
• Stamp duty or SDLT.
• Any arrangement fees if you borrow.
• Working capital for the months after completion, while you settle in.
• A buffer for problems you find after you take over.

‍

How to fund the purchase

Many acquisitions combine the buyer's own money, a loan and some deferred payment to the seller. The right mix depends on the deal size, the business's cash flow and how much risk the seller will share.

Through manda, acquisition finance is arranged as part of the deal. manda's transaction managers work with iwoca's unsecured lending and partner secured lenders to build offers that can be funded, so sellers know your offer is credible.

For more on each route, read our guides to funding options for an acquisition and getting a loan to buy a business.

‍

How long does it take to buy a business?

The time it takes to buy a business depends on the deal: clean accounts, a motivated seller and funding agreed early all make it faster. manda targets three to six months from mandate to a signed letter of intent, and completion follows after due diligence.

What usually slows a deal down:

• Incomplete or out-of-date accounts. Due diligence stalls, and a seller who's slow to share figures is a warning sign.
• Regulation. Some sectors need licences or approvals transferred before completion.
• Negotiation. Price, warranties and earn-out terms can take several rounds.
• Problems found in due diligence. Tax liabilities or disputes mean more digging or new terms.
• Slow advisers. Solicitors or brokers who don't respond hold everyone up.
• Funding. A loan or investment that's agreed late can delay completion.

‍

Completion and handover

At completion you sign the sale and purchase agreement, pay the price and take ownership. Then you tell Companies House, HMRC, banks, customers, suppliers and staff, and start the handover.

Completion is the point where the deal becomes official, but there are still practical and legal details to tie up. The sale documents, final price calculations and transfer of responsibilities all need to be handled carefully to ensure a smooth transition. Key things to cover include:

• Sale and purchase agreement. The binding contract, with warranties and indemnities. The seller's disclosure letter lists any exceptions to the warranties.
• Price adjustments. Completion accounts or a locked-box mechanism settle how cash, debt and working capital adjust the final price.
• Notifications. Update Companies House with new directors or shareholders, and tell HMRC, your bank, insurers, customers and suppliers.
• Licences and permits. Transfer them or reapply where needed.
• Handover. Agree how long the seller stays to help. A short overlap helps you learn the business.
• Earn-out tracking. If you agreed one, keep clear records of the targets.

‍

Common mistakes to avoid when buying a business

Common mistakes include thin due diligence, overpaying and running short of cash after completion. Each one is easier to prevent before you sign than to fix afterwards.

• Skipping parts of due diligence. Gaps leave you exposed to liabilities you didn't price in.
• Overpaying. Test the seller's forecasts with your accountant and an independent valuation.
• Underestimating working capital. Plan for the months after completion, with a buffer.
• Relying on one customer or supplier. Check how much revenue would go if one relationship ended.
• Ignoring staff and culture. Talk to the team early and plan how you'll handle change.
• Rushing. Delays are frustrating, but skipped steps cost more.
• No plan for the first months. Know what you'll do from day one.

‍

How iwoca can help

manda helps limited company buyers find and buy a UK small business, with verified financials and acquisition finance arranged as part of the deal. An iwoca Flexi-Loan can also fund working capital once you own the business.

With manda, you can:

• Find businesses from iwoca's customer network, many not on public listings.
• Check sellers' financials, verified before you see them.
• Fund the deal, with acquisition finance structured alongside the offer.
• Close with transaction managers coordinating the process to completion.

The iwoca Flexi-Loan lets a limited company borrow up to £1 million over up to five years, with a decision within 24 hours, but it might be longer depending on the complexity of the request. You pay interest only on what you draw, and there's no fee for repaying early, though an upfront fee can apply. Every new Flexi-Loan needs a personal guarantee from at least one director.

iwoca lends only to UK limited companies, so manda and iwoca lending aren't the right fit if you're not buying through one. They also aren't built for businesses valued well above £10m. iwoca has provided £5bn+ of funding to UK small businesses so far.

‍

Buying a business: quick answers

Do you pay stamp duty when you buy a business?

Yes, if you buy shares. Stamp duty is 0.5% of the price when the transaction is over £1,000. In an asset purchase there's no stamp duty on shares, but SDLT applies if property is included.

‍

Can you buy a business with no money?

It's rare to buy with none of your own money. Seller financing, earn-outs and loans can cut how much cash you put in upfront, but lenders and sellers usually want you to share the risk.

‍

What does leasehold mean in a business for sale listing?

It means the business rents its premises on a lease rather than owning them. You buy the business and take over the lease, so check the rent, the time left, any break clauses and whether the landlord must agree to the transfer.

‍

What is FF&E when buying a business?

FF&E stands for fixtures, fittings and equipment: the physical items included in the sale, such as furniture, kitchen equipment or shop fittings. Check the list and their condition during due diligence.