How to Buy a Business

Clients Rate Lawyers on our Platform 4.9/5 Stars
based on 5,649 reviews

Jump to Section

Need help with a Business Purchase Agreement?

Create a free project posting

Buying a business involves various steps and considerations, such as due diligence, negotiation, financing, contract signing, and others specific to a location. Acquiring an existing business can be an exciting opportunity for entrepreneurs and investors alike.

It allows for faster entry into the market, established customer base, and potential synergies. In this comprehensive guide, we will explore the key steps and considerations involved in successfully buying a business, from conducting due diligence to negotiating the purchase price, financing options, drafting the business purchase agreement, and closing the deal.

Step-by-Step Guide to Buy a Business

Buying a business requires a step-by-step process included in the guide.

  1. Analyzing the Acquisition Process

    The first step in buying a business is to understand the acquisition process. It typically involves several stages, including identifying and evaluating potential business opportunities, conducting due diligence, negotiating the purchase price and deal structure, financing the acquisition, drafting and reviewing the business purchase agreement, closing the deal, and managing the post-acquisition transition.

  2. Conducting Due Diligence

    One of the most critical steps in buying a business is performing due diligence. This involves thorough research and analysis of the target business to assess its financial, legal, and operational aspects. It includes reviewing financial statements, tax records, contracts, licenses, permits, employee agreements, intellectual property, customer and supplier relationships, legal and regulatory compliance, and other relevant information. Proper due diligence helps identify any potential risks, liabilities, or undisclosed issues that may impact the value or viability of the business.

  3. Negotiating Purchase Price and Deal Structure

    Clearly discussing and negotiating the purchase price and deal structure is a crucial aspect of buying a business. It requires effective communication, strategic planning, and financial analysis. This includes determining the fair market value of the business based on financial statements, industry benchmarks, and other valuation methods. Negotiating factors such as the purchase price, payment terms, earn-outs, seller financing, non-compete agreements, and other deal terms can significantly impact the overall cost and financing requirements of the acquisition. Tips for successful negotiations include knowing your budget and limits, understanding the seller's motivations, conducting market research, and seeking professional advice when needed.

  4. Financing Your Acquisition

    Acquiring a business often requires significant capital investment. There are several financing options available for funding the acquisition, depending on the size, industry, and financial condition of the business, as well as the buyer's creditworthiness and risk appetite. These options may include traditional bank loans, Small Business Administration (SBA) loans, asset-based loans, seller financing, equity investments, venture capital, and other sources of capital. Each option has its pros and cons, and careful consideration of the financing options and their impact on the business's cash flow, debt service, and future growth is essential.

  5. Reviewing Legal Considerations

    Drafting and evaluating the business purchase agreement is a critical step in the acquisition process. The purchase agreement is a legally binding contract that outlines the terms and conditions of the transaction, including the purchase price, payment terms, representations and warranties, indemnification, dispute resolution mechanisms, and other key provisions. It is essential to seek legal advice to ensure that the purchase agreement is drafted and reviewed thoroughly to protect the buyer's interests and comply with relevant laws and regulations.

  6. Finalizing the Acquisition and Transitioning into Ownership

    Once the due diligence is complete, negotiations are finalized, financing is secured, and the purchase agreement is drafted and reviewed, the next step is to close the deal. Closing involves the exchange of legal documents, funds, and ownership transfer. It typically includes the finalization of the purchase agreement, transfer of assets or shares, payment of the purchase price, and other legal and administrative tasks. Post-closing, the buyer assumes ownership and begins the post-acquisition transition process, which may involve integrating the acquired business into existing operations, implementing changes, managing employees, customers, and suppliers, and executing the strategic plan for the business.

Key Considerations When Hiring a Lawyer to Buy a Business

Approaching a lawyer for buying a business is a crucial step in the acquisition process to ensure legal compliance and protect your interests. Here are some key considerations when seeking legal advice for buying a business:

  • Expertise in Business Law: Look for a lawyer who specializes in business law and has experience in handling business acquisitions. They should have a thorough understanding of relevant laws and regulations, including contracts, corporate law, tax law, intellectual property, employment law, and any industry-specific regulations.
  • Due Diligence Assistance: A qualified lawyer can help you conduct comprehensive due diligence on the business you are planning to buy. They can review financial records, contracts, licenses, permits, and other legal documents to identify potential risks or liabilities.
  • Purchase Agreement Drafting and Negotiation: Your lawyer can assist in drafting and negotiating the purchase agreement, which is a critical legal document that outlines the terms and conditions of the acquisition. They can ensure that the agreement protects your interests, includes necessary representations and warranties, and addresses any potential legal issues.
  • Financing and Structuring Advice: If you require financing to fund the acquisition, a lawyer can provide guidance on different financing options and help you structure the deal to minimize risks and tax implications.
  • Legal Compliance and Risk Management: Buying a business involves various legal and regulatory requirements, such as licenses, permits, contracts, and employee agreements. A lawyer can ensure that you comply with all applicable laws and regulations and help you identify and manage any legal risks associated with the acquisition.
  • Dispute Resolution and Litigation Support: In case of any disputes or legal issues arising during or after the acquisition, a lawyer can provide legal representation and support in resolving the disputes through negotiation, mediation, arbitration, or litigation if necessary.
  • Confidentiality and Non-Disclosure: Your lawyer can assist in drafting and reviewing confidentiality and non-disclosure agreements to protect sensitive information during the due diligence process and negotiations.
  • Closing and Post-Closing Support: Your lawyer can guide you through the closing process, including the transfer of ownership and payment of the purchase price. They can also provide post-closing support, such as assisting with transition arrangements, employee contracts, and other legal matters.
Meet some lawyers on our platform

Don G.

37 projects on CC
View Profile

Ryenne S.

264 projects on CC
View Profile

Michael S.

2 projects on CC
View Profile

Bryan B.

144 projects on CC
View Profile

Key Terms for Buying a Business

  • Due Diligence: The thorough investigation and evaluation of a business's financial, legal, and operational aspects before making a purchase.
  • Purchase Price: The agreed-upon amount that the buyer will pay to acquire the business, including any adjustments, earn-outs, or financing arrangements.
  • Purchase Agreement: The legally binding contract that outlines the terms and conditions of the business acquisition, including the purchase price, payment terms, representations and warranties, and other relevant provisions.
  • Financing Arrangements: The methods used by the buyer to fund the acquisition, such as bank loans, seller financing, or equity investments.
  • Closing: The final stage of the business acquisition process where the purchase agreement is executed, and ownership of the business is transferred from the seller to the buyer, typically accompanied by the payment of the purchase price.

Final Thoughts on Buying a Business

Buying a business can be a rewarding endeavor for entrepreneurs and investors, but it requires careful planning, research, and legal considerations. By following a step-by-step process that includes conducting due diligence, negotiating the purchase price, securing financing, drafting a comprehensive purchase agreement, and closing the deal, buyers can mitigate risks and increase the chances of a successful acquisition.

It is crucial to seek professional advice from experienced attorneys, accountants, and financial advisors throughout the process to ensure compliance with relevant laws and regulations and protect the buyer's interests. With proper preparation and execution, buying a business can be a strategic move towards business growth and success.

If you want free pricing proposals from vetted lawyers that are 60% less than typical law firms, click here to get started. By comparing multiple proposals for free, you can save the time and stress of finding a quality lawyer for your business needs.

Need help with a
Business Purchase Agreement?

Create a free project posting

Meet some of our Lawyers

Jimmy V. on ContractsCounsel
View Jimmy
5.0 (1)
Member Since:
February 10, 2023

Jimmy V.

Free Consultation
42 Yrs Experience
Licensed in TX
University os San Diego

I’m a semi-retired, long-time US attorney with substantial experience in business and corporate law. I counsel startups and small businesses, help them set up corporations or LLCs across the country and draft a variety of contracts and corporate documents.

Robert M. on ContractsCounsel
View Robert
5.0 (1)
Member Since:
February 14, 2023

Robert M.

Free Consultation
2 Yrs Experience
Licensed in TN
Nashville School of Law

Robert is a sixth-generation Tennessean and part of a long line of Tennessee attorneys: There has been a Marks attorney in Tennessee since 1856. In 1929, Robert’s great-grandfather established an event venue, Shadowbrook, which Robert has worked at his entire life, including managing for 10 years. He knows what business owners are dealing with—especially venue owners—because he has dealt with it. While Robert loves the hospitality industry, he pursued his passion. In 2016, Robert decided to attend law school and continue managing the business. He thrived. He was a founding member of the Nashville School of Law's Legal Aid Society, received the Tennessee Supreme Court’s Law Student for Justice award, and interned with the Tennessee Supreme Court's Access to Justice Commission. Before co-founding Mercury Legal Group, Robert focused on estate planning in solo practice. In this role, he helped clients protect what they had spent a lifetime building. Now he helps his clients build their businesses by providing tailored legal services.

O.T. W. on ContractsCounsel
View O.T.
5.0 (1)
Member Since:
March 8, 2023

O.T. W.

Free Consultation
Washington, DC
8 Yrs Experience
Licensed in MD, NY
Texas Southern University - Thurgood Marshall School of Law

Hi, my name is O.T. and I own The Walker Collective, a law firm that caters to the contractual, intellectual property, and business formation needs of creative entrepreneurs and small business owners. I am licensed to practice in Maryland and New York.

Amber M. on ContractsCounsel
View Amber
5.0 (3)
Member Since:
March 8, 2023
Kendall C. on ContractsCounsel
View Kendall
5.0 (5)
Member Since:
March 10, 2023

Kendall C.

Chief Counsel
Free Consultation
Suwanee, GA
22 Yrs Experience
Licensed in GA, TX
Tulane University

Kendall is a data privacy attorney by trade, and is an active member of the Bar in Texas and Georgia. In litigation, he handled thousands of cases to final disposition in litigation throughout the United States, Latin America, & Europe. As corporate counsel, he guides companies through the marketing and advertising industry and, by extension, many other industries. Further, Kendall is an adherent to the Ben Hogan school of swing thought and, by natural extension, is a proponent of accurate wedge play through residential neighborhoods. He occasionally aspires to a career in turf management.

Jason H. on ContractsCounsel
View Jason
4.9 (3)
Member Since:
March 5, 2023

Jason H.

Managing Attorney
Free Consultation
Dallas, Texas
22 Yrs Experience
Licensed in TX, VA
Regent University, School of Law

Jason has been providing legal insight and business expertise since 2001. He is admitted to both the Virginia Bar and the Texas State Bar, and also proud of his membership to the Fellowship of Ministers and Churches. Having served many people, companies and organizations with legal and business needs, his peers and clients know him to be a high-performing and skilled attorney who genuinely cares about his clients. In addition to being a trusted legal advisor, he is a keen business advisor for executive leadership and senior leadership teams on corporate legal and regulatory matters. His personal mission is to take a genuine interest in his clients, and serve as a primary resource to them.

Kandil O. on ContractsCounsel
View Kandil
Member Since:
February 9, 2023

Kandil O.

General Counsel Africa
Free Consultation
9 Yrs Experience
Licensed in CA
ULH2 - master degree in business law

A business law practitioner by passion, I take pride in the perfection of my contracting Skills. Every piece of information I gather and spin together transforms to a legally binding document, providing great legal protection for start-ups and leading to eventual growth. I am a natural in law and entrepreneurship, making for a perfect blend.

Moxie M. on ContractsCounsel
View Moxie
Member Since:
February 11, 2023

Moxie M.

Employment Lawyer
Free Consultation
Los Angeles, CA
13 Yrs Experience
Licensed in CA, FL, OH
Stetson University College of Law

Lindsey has always been deeply invested in the power of knowledge; she was born and raised in Columbus, Ohio before making her way to Miami University for a dual Bachelor's degree. Afterward, Lindsey completed a Juris Doctor at Stetson University with an International Law concentration before earning a Health & Hospital law Certificate from Seton Hall School of Law. After graduating law school, Lindsey began her career as an associate at a Florida-based insurance litigation firm. She eventually transitioned to become a multi-year Rising Star in Employment Law by Super Lawyers as a labor and employment lawyer with Scott Wagner and Associates, supporting clients in Florida, California & Ohio with employment law matters. Her expertise covers counseling on workplace policies/handbooks; investigations into EEO discrimination/retaliation claims; wage disputes & wrongful terminations - equipping employees across multiple states for success in the ever-changing modern workforce landscape. Leveraging extensive knowledge of state/federal regulations gained from handling dozens of cases over many years, Lindsey has established herself as a leader in the field. Lindsey is a seasoned litigator, well-versed in the complexities of employer and employee disputes. She has represented clients on both sides during numerous mediations and provides an informed perspective when advocating for her clients' interests. She sharpened her dispute resolution skills by completing Harvard Law School's Negotiation Mediation course as part of their Executive Education Program as well as a Florida Circuit Civil Certified Mediator - making her qualified to mediate Circuit Civil cases in Florida as well as California and Ohio. Her breadth of knowledge provides valuable insight into the complexities each side faces while navigating their way through conflict mediation situations. With her varied expertise in the world of entertainment industry employment law, Lindsey has become a go-to source for Hollywood professionals, studios, and companies looking to make sure their legal considerations and entertainment contract law knowledge is up to date. From contract negotiations and employment advice to her outstanding knowledge of current regulations, she provides clients with everything they need for success both now and into the future. Lindsey dedicates her time and expertise to advancing the legal community. She proudly serves on the Executive Council for Florida Bar Association Labor and Employment Section, as well as with American Bar's Membership Outreach Committee in a leadership role. Lindsey is also an respected LA Magazine Editorial Board Member while Co-Chairing both LACBA CLE Event Dinner Committees - focusing on labor and employment law developments. Lindsey is passionate about providing accessible legal services to those in need. She serves on the Pro Bono Mediation Panel for the U.S Central District Court of California, volunteers as a mediator with California Lawyers for Arts and acts as Settlement Officer with Los Angeles Superior Court's ResolveLA program - all while donating her time towards resolving disputes through pro bono mediation at Equal Employment Opportunities Commission (EEOC). Lindsey is a globetrotter, an outdoor enthusiast, and dedicated sports fan all rolled into one. While splitting time between California, Florida and Ohio she has the best of three world - from hiking trails to family gatherings there's always something interesting on her horizon! Plus with photography as a hobby Lindsey enjoys capturing life’s precious moments so they can be treasured for years to come.

Candace M. on ContractsCounsel
View Candace
Member Since:
February 24, 2023

Candace M.

Free Consultation
Prosper, Texas
24 Yrs Experience
Licensed in LA, TX
Loyola University

For over 20 years, as an attorney and real estate broker, Candace has used her passion for business and real estate to help her clients succeed as business owners, entrepreneurs Realtors, and real estate investors. She and her team go above and beyond to simplify and solve those issues which trouble her clients. From the simple to the complex, she is ready to help. Her experience includes, Real Estate law, Contracts, Business Formation, Business Operating AGreements and Entrepreneurial counseling.

Alan A. on ContractsCounsel
View Alan
Member Since:
February 25, 2023

Alan A.

Free Consultation
Austin, Texas
18 Yrs Experience
Licensed in OK, TX
University Of Oklahoma School of Law

I have dedicated my professional career and practice to Federal Government Procurement Law. My practice includes experience as an Army JAG who specialized in Government Procurement Law who represented contracting commands and requiring activities both deployed and in the United States and now as a civilian attorney who represents clients in all aspects of Federal Government Procurement Law. My clients are people and firms that are developing technology through the SBIR/STTR programs, OT's, and businesses using Small Business Administration (SBA) contracting programs.

Alex F. on ContractsCounsel
View Alex
Member Since:
March 17, 2023

Alex F.

Managing Attorney
Free Consultation
Golden, CO
11 Yrs Experience
Licensed in CO, TX
The University of Texas School of Law

I am a small business attorney licensed to practice in Colorado and Texas. I focus on commercial lending and outside general counsel services.

Find the best lawyer for your project

Browse Lawyers Now

Want to speak to someone?

Get in touch below and we will schedule a time to connect!

Request a call

Find lawyers and attorneys by city