What are the most important issues to think about when you first consider buying a business? First and foremost, says Adam Stronach, Corporate & Forensic Services partner at Harwood Hutton, potential purchasers should recognize they do not buy businesses every day and there are people out there who do.
“If the purchaser tries to tackle all the issues in buying a business, two things will happen,” says Adam. “First, valuable management time will be diverted away from the purchaser’s existing business. Second, the purchaser could be missing out on a wealth of experience on the advisory and transactional side from engaging professional advisers who help business purchasers days in, day out.”
Adam stresses that the advice sought should be proportionate to the transaction concerned. “Often, clients do not want or need a full-on due diligence exercise before they purchase. Particularly with smaller transactions, the purchaser may well be an entrepreneur who has known the vendor through business connections for a long time.
“In the owner-manager market, there is no sense in replicating knowledge a client already has through a due diligence exercise.”
Of much more significance may be whether a purchaser can, for example, work its newly acquired business to service debt it has taken on to finance the purchase.
“All too often heads of terms are struck with enthusiasm only for the purchaser and the vendor to realise later on that their deal is unworkable,” says Adam.
“Entrepreneurs would be well advised to find professional advisers with strong credentials in helping owner-managers negotiate purchases in the first instance and assess key risks through limited but focused due diligence after a deal has been struck.”
Harwood Hutton helps owner-managers with all aspects of buying a business, from searching for suitable targets at the outset, to finding finance, through to advising the purchasers and their legal advises as deal completion approaches.
“It is relatively easy to say, ‘I want to buy a business’,” says Adam. “Where professional advice from accountants and corporate financiers can be key is in assessing which businesses to approach, whether additional finance is required, how that additional finance is to be serviced, what commercial and taxation implications arise from a proposed purchase, how the transaction is going to be managed, and what to expect once the deal is completed.
“My advice would be to make sure you consult with accountants, business advisers and lawyers who are well versed in the highs and lows of corporate transactions.
“You should never outsource key decisions on targeting and buying a business, but however many times you have bought businesses before, in the owner-manager/SME sector it is seldom appropriate to do everything with only in-house resources.”
I always get quick, clear and definitive responses from the Harwood Hutton tax team – commercial answers to commercial issues.Robin Berry – Morgan Management
Right from the outset Harwood Hutton gave us direction and great advice – and that advice has evolved over the years as we’ve grown. We’re both medium-sized companies providing a bespoke service – one furniture, one accountancy – and the relationship works.Andy McCarron, McCarron and Co
I’m deeply impressed with Harwood Hutton’s extensive knowledge of tax arrangements for residential and commercial property landlords.Qadeer Ahmed, MD, ABA Finance
They really took their time to understand what was important to us and our business and the expertise we required. Whoever we speak to at HH, we get the same fantastic response and technical input. It’s a real partnership.Edward Finch, group MD, MRIB insurance brokers
I have worked with the directors at Harwood Hutton on a number of mutual client matters over many years. The reassurance of their clear, commercial and focussed advice is one of the main reasons I regard this as one of my most valuable professional relationships.Frank Wessely, Partner, Quantuma LLP
Harwood Hutton never seem to rest on their laurels. They are always seeking out new avenues and ways to improve their offering. A very forward-thinking company with staff who are always well briefed and who approach each task with drive.Karl Austen, MD, Surefoot Communications
We have engaged Harwood Hutton in several areas of structuring, including VAT issues, decoupling an SPV from a group structure and HMRC clearance for a transaction. The team have exceeded all expectations by being proactive, measured and very thorough.Adam Fawsitt, Director, FHT Limited
We moved to Harwood Hutton as they delivered a succinct and professional proposal. If anything, we have been more impressed post-move. They are a fantastic company to work with. They do truly differentiate. They have the skills and capabilities of a mega firm but with a personal service.Edward Finch, group MD, MRIB insurance brokers
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