May 27, 2026
By Sam Bacall, Director
You may be considering buying a business because growth through acquisition feels more efficient than building everything organically.
You might want to enter a new market, expand your customer base, acquire specialist skills, secure valuable contracts or bring a competitor into your group.
The right deal can accelerate your growth, improve profitability and strengthen your market position.
The wrong one can absorb cash, distract your management team and create liabilities you didn’t want.
That said, there are several ways to buy or combine with another business, and the structure will shape the tax, legal, financial and commercial risks involved.
There are also franchise purchases, distressed business acquisitions and partial acquisitions, where you buy a stake rather than the whole company.
Regardless of which you decide to go for, each option has a different risk profile, so the structure really matters and your decision shouldn’t be taken lightly.
In my experience, a strong acquisition opportunity is never openly advertised.
Some business owners are open to selling but have not formally gone to market while others may only consider a sale if the right buyer approaches them (i.e. an employee or friend/family).
However, common places to look include business brokers, corporate finance advisers, accountancy firms, solicitors, industry contacts, trade associations, networking groups and specialist online marketplaces.
(I have included some links to these at the bottom of this article).
You may also find opportunities through insolvency practitioners, but distressed acquisitions have their own issues and a struggling business might look cheap because you’re buying unpaid creditors, damaged reputation, weak systems, staff issues or a customer base that is already leaving.
If you are serious about buying a business, it helps to define what you are looking for before you start:
Without a clear acquisition brief, it is easy to be distracted by businesses that look interesting but do not actually support your goals.
Financial due diligence (FDD) is done on the seller’s accounts, management information, tax records, forecasts and sales data as these cannot simply be taken at face value if you are the buyer.
FDD should help you understand the true financial position of the business and whether the price is justified.
It will usually test:
For example, profits may rely on low owner salaries, deferred costs, one-off contracts or underinvestment, while cashflow may be flattered by late supplier payments or aggressive debtor collection.
FDD should also test normalised earnings, adjusting profits to reflect what the business is likely to generate under new ownership and challenging any add-backs, exceptional income or reduced owner costs.
However, legal *, tax and commercial due diligence should also review contracts, leases, employment matters, intellectual property, Corporation Tax, VAT, PAYE, National Insurance, customer relationships, pricing, pipeline, suppliers and growth prospects.
*We cannot advise on legal due diligence but have contacts in the legal profession who would be happy to assist you.
Valuing a business is part science, part judgement.
Common methods include maintainable earnings, discounted cashflow, asset-based valuation and sector-specific benchmarks.
In smaller private company transactions, buyers and sellers often focus on adjusted profits, then apply a multiple based on risk, growth potential, sector norms and market demand.
However, a valuation is only as strong as the assumptions behind it. A business with stable recurring income, strong systems and a capable management team may justify a higher multiple.
One that depends heavily on a single owner, customer or contract is likely to attract a lower valuation.
The headline figure also needs careful scrutiny. Deal structures such as deferred consideration, earn-outs, loan notes or performance-related payments can all affect the true value of the transaction.
Ultimately, valuation is not just about what a business is worth on paper.
It is about what a buyer is willing to pay, what a seller is prepared to accept and whether the numbers stand up commercially.
Although every deal is different, most acquisitions follow a similar path:
However, completion is not the finish line.
Due diligence should test the value, risks, funding, tax position, working capital needs and commercial assumptions behind the deal.
It should also shape your integration plan, because an acquisition can affect cashflow, management time, staff, customers, systems, suppliers and brand positioning.
Integration needs to be handled carefully as, whilst two businesses may look compatible on paper, they can operate very differently in practice.
Culture, reporting, leadership style, customer expectations and internal processes all matter and poor integration can quickly damage the value you have just paid for.
That is why buyers should plan for both the opportunity and the downside.
What happens if revenue falls, key staff leave, a major customer goes elsewhere or integration takes longer than expected?
Your accountant should be involved early, ideally before a serious offer is made as they can help assess affordability, review the numbers, challenge assumptions, model funding options, consider tax implications and identify risks that may not be obvious from the accounts alone.
We will not simply ask whether the target business is profitable. We will ask whether the profit is sustainable, whether the valuation is fair, whether the funding is sensible and whether the acquisition strengthens your overall position.
Buying a business can be a powerful growth move, but only if the numbers, structure and integration plan stand up in practice.
Before committing, take advice, test the assumptions and make sure the deal works beyond the headline price.
Places to buy businesses:
Freedman Frankl & Taylor is the trading name of FFT Limited.
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A list of connected firms is available upon request at our registered office.