Business purchase process
What are the Stages in the business buying process?
- Deal origination and target business identification – this is the start of your business buying journey. You will normally need to “kiss a lot of frogs” to find the right business. For more information on how to do this, you can take a look at the services offered by the Valius Group.
- Meeting the sellers – initially via Zoom/Teams online where you can undertake a fact find to explore more detail on the day to day. If you progress to a second meeting, this will likely be a face to face at the seller’s premises or, if the seller is particularly sensitive about this, a neutral venue to suit both parties.
- Valuation – this will be conducted by your corporate financier/M&A accountant and will be carried out using recognised valuation methodologies. It will give you a range of valuations, based on differing multiples and thereafter, the buyer will make a decision in conjunction with their adviser as to the exact level of the valuation which you’d like to progress formally.
- Indicative offer to purchase presented to the sellers’ advisers – this is an informal but crucial stage. The indicative offer will typically be presented via email and will let the seller know you are serious about purchasing their business. It will include the key terms of the offer for them to consider.
- Heads of Terms (HOT) or Letter of Intent (LOI) – this is the document which outlines the key terms of the deal before moving to a legal/contractual position as defined in the Sale & Purchase Agreement (SPA) drawn up by the buyer’s lawyers. The Heads document is presented by the buyer to the seller via their advisers and contains a number of key areas around the deal. Essentially, the more comprehensive, the better on the bas