Category: Buying a Business

Are you looking to buy a business? Did you know most quality small to medium businesses are bought before they come to market?

The hidden market is where up to 80% of profitable and fairly-priced businesses sell without any advertisement by the owner. Also known as off-market opportunities, it’s where time is saved, sellers can meet suitable buyers through trusted recommendations, and buyers can avoid competition.

How do you find a business for sale in the hidden market?

At Chelsea Corporate, we’ve been assisting clients with business acquisitions for many years and are dedicated to delivering a professional service with complete confidentiality. As specialist UK business brokers, we present buyers with a number of potential opportunities. Our relationships with motivated sellers across almost every UK industry means we’re able to present off-market businesses for sale and help you to buy the perfect company hidden from the market.

What type of businesses can I buy off-market?

Our team of business acquisition specialists at Chelsea Corporate strive to ensure you are presented with a good number of off-market opportunities and will search for suitable UK businesses for you to buy.

We’re connected with business sellers in a wide range of industries, including:

• Accountancy and Tax
• Architectural & Design
• Aviation
• B2B Service
• Beauty, Care and Salon
• Building and Construction
• CBD & Hemp
• Cleaning and Facilities Management
• Dental
• Distribution and Storage
• Engineering
• HR Consultancy
• IT
• Insurance
• Management Consulting
• Manufacturing and Industrial
• Pharmaceuticals and Medical
• Print, Media, Publishing and Advertising
• Retail
• Scaffolding
• Security
• Service Providers
• Software

If you can’t see the industry you’re interested in investing in, don’t hesitate to contact the Chelsea Corporate specialists for more hidden market opportunities.

What are the most profitable businesses to buy off-market?

At Chelsea Corporate, our experienced business brokers measure the profitability of a business by using a high EBITDA ratio.

• Earnings Before Interest, Taxes, Depreciation, and Amortization

The average EBITDA ratio of a business in the UK is 8.3%. Please note this percentage varies from industry to industry. Take a look at the video below for the five most profitable businesses to buy off-market.

Discover the Hidden Market with Chelsea Corporate

Buy a business on the ‘hidden market’ with the support of Chelsea Corporate.

Our knowledge and experience can help save you time and money and negotiate the best possible deal when acquiring a business. So, if you’re an entrepreneur, managing director, CEO or a high net worth individual looking to buy a business, look no further than our team of professional off-market specialists.

We’ll do all of the preliminary work, find you the best hidden market acquisition opportunities and assist you with the negotiation through to completion.

Buy a business off-market with Chelsea Corporate. Call our London office today on +44 (0) 20 3011 1373 or email info@oldchelsea.fusionanalyticsworld.com to get started.

At Chelsea Corporate, we have guided many companies through the merger and acquisitions process. With experience across nearly every sector within the UK and internationally, we have worked with both sellers and buyers at every stage of the sales process.

We understand this process involves time and effort on both sides, with the potential for mistakes. So we’ve rounded up some of the most common mistakes when buying a business, and here are our tips on how to best avoid them.

1. Not being prepared

When getting ready for your first meeting with the seller, it is always best to go in as prepared as possible. Review the available public information so that you can go into the meeting with as much information as possible. In addition, when working with a broker like Chelsea Corporate, we share relevant information with you.

2. Making prejudgements about the business or seller

You want to enter the process clear of any preconceived notions about the company – or the seller. There is the temptation to take biases into the first meeting with a seller, assuming they are less experienced or desperate to sell. You want to use these first meetings to find out as much as possible about the business. Ask the right questions but avoid trying to offer business advice.

Another common mistake is assuming there are no other parties interested – remember, those good businesses are always sought after, so you don’t want to become too complacent.

3. Being too aggressive on price

It is essential not to be too focused on price, especially in the first meeting. Pushing for a reduced price early on in the process can be irritating to a seller. Especially if the business is smaller or family-run and the seller has an emotional attachment to it.

When you reach the negotiation stage, it is imperative to avoid going in with a low offer. Many deals fail in this stage because the temptation is there to get a reasonable price, but a low offer can come across as insulting. Instead, put yourself in the seller’s shoes and make an offer you would accept, and this also leaves you a margin to negotiate.

Another failure is offering low remuneration on consultancy. If the seller stays on with the business after the sale, offer them the salary you would accept.

4. Failing to understand who has the power

You should never enter this process assuming there is an unbalance of power in either direction. For example, assuming the seller is desperate to sell means you may think you are in a better position.

You will have a sense of your power and the strength of your negotiation standpoint, but over-representing a strong hand is undoubtedly bad – but displaying a weak hand is even worse. When in discussions with sellers and businesses, knowing where you stand is very, very important.

5. Asking for a re-valuation with no rationale

Usually, there is a strong seller bias in the valuation of the business. Whether it is because they are sentimental in their opinion on how much their business is worth or outside advisers instil unrealistic expectations about the company.

When working alongside Chelsea Corporate, we provide comparable evidence of similar deals done in that particular sector, so it brings a dose of reality. Another solution is for you as a buyer or a business to have options available. For example, suppose you have a good flow of appropriate targets at every stage of the process. In that case, you are not necessarily prone to being under pressure to deal with a business with unrealistic valuation expectations.

6. Taking too long to respond

While buying a business is a big decision with many aspects that need to be considered, it is crucial not to lose momentum. If you drop out of contact with the seller for long periods, they may think you have lost interest; they may get restless and start looking around for another buyer. So keep the discussions going and connect with them regularly.

7. Not getting the right legal advice

You must have the right advice for every stage of the process of buying a business. Some buyers go in unrepresented, thinking they can do it themselves with a copy & paste agreement. This is not advisable. An M&A lawyer will review the agreement and make sure the documents are fit for purpose.

8. Talking about the deal before it’s done

Not talking about a deal to outside parties during negotiation sounds obvious, but it is a common mistake. Informing outsiders about the deal, especially if one or both companies are public, is a breach of confidentiality. Disclosing information could also cause issues for the business by tipping off an unsuspecting employee and causing unnecessary unrest or letting rivals know that the company is for sale, leaving you open to a bidding war.

9. Contacting the seller’s customers or vendors without permission

Typical failures here are for an overzealous buyer, keen to start and introduce themselves to existing customers and vendors. However, these relationships are a big part of the value of the business, so you want to nurture them. The last thing you want to do is upset existing customers or suppliers by forcing yourself in presumptuously.

The solution here is very simple. Wait until the deal is done.

For more information or advice on mergers and acquisitions, don’t hesitate to get in touch with Chelsea Corporate today. You can reach our experienced team by calling +44 (0) 20 3011 1373 directly, or use our simple online contact form and we’ll get back to you as soon as possible.

Chelsea Corporate are experts in facilitating the sales of businesses. With experience across a wide range of sectors, both in the UK and internationally, our team can help guide you through the process, from finding the right business to completing the purchase.

The process of buying and selling a business can be stressful, but a friendly rapport between both parties can help ease the process. That’s why it’s important to start the process off on the right foot, right from the initial meeting.

We’ve put together some tips to make sure your first meeting with the seller runs smoothly when you’re buying a business.

1. First impressions really do count

When meeting the seller of a business for the first time, start with a warm introduction. While you might be keen to get straight into business mode, creating that initial bit of rapport and friendliness is essential.

2. Information sharing should go both ways

While you’ll be looking to get as much information about the business from them, sharing your own story helps to build initial trust and starts the meeting off on the right note.

A seller wants to understand a little bit more about where you – a buyer interested in their business – is coming from. Sharing a bit of your background and how serious you are about acquiring the business can help establish good rapport and help them see how their business may fit with yours.

We’ve found a lot of value in explaining your background, your experience in the sector, what you have acquired in the past, and if so, what you may have purchased, etc.

3. Understand your seller

The seller will undoubtedly be attached to their company – they may have set it up 30 years ago and are approaching retirement age. They’ve put blood, sweat and tears into building the business to where it is today, so you should be aware that sellers may react emotionally.

It’s not just about understanding the business; it’s also understanding the person. This will help reassure them they can work with you going forward. So any trust you can build at the start is quite critical.

Let the seller know your intentions post-sale – are you looking to keep everything as it is? Do you want to build upon what the seller has already created? Again, you need to think about these things and ask the seller what’s important to them, rather than just focusing on the money aspect.

Make sure to consider what the sale impact might have on the business and its employees. For example, some sellers may consider the employees an extended family, making it crucial to show respect during the purchasing process.

4. Have an open and positive attitude

During any initial meetings, it’s vital to use positive language and be complimentary. If you have somebody else in the meeting with you, talk about how well the business has done over the years and what’s been achieved.

While it is important to point out areas you feel are a weakness or a potential risk, there is a right time and place to do that, preferably after the initial meeting.

If you are genuinely interested in the business, show them – but don’t be too enthusiastic and give away your hand too soon.

5. Ask the right questions

Your idea of the right price for the business can be influenced – just as much by your personal judgements – as it can by facts and figures.

Each buyer may have a different view on perceived risk, depending on who they are and what they already have in place. But, typically, the lower the risk you perceive, the higher you view the value of the business, making it crucial that you ask the right questions.

Ask questions about their current customers and vendors. Also, ask how long the business has been on the market. If it has been a few years, they may choose to accept a lower offer or be a little bit more flexible.

For more information on how to hold a successful M&A meeting, or any other advice on how to go about buying a business, don’t hesitate to get in touch today. You can reach our dedicated team today by calling +44 (0) 20 3011 1373 or, if you prefer, use our simple online contact form, and we’ll get back to you as soon as possible.

As the old saying goes, there’s more than one way to crack an egg; similarly, there’s more than one way to buy a business. A seller can structure their sale either as a stock sale or as an asset sale. Each method has its benefits, both for the seller and for the buyer. The guide below first defines each form of sale, then gives a bird’s-eye view of the pros and cons of each when compared to the other.

 

What Is an Asset Purchase Agreement?

Both asset deals and share deals broadly achieve the same objective: they give you, the buyer, ownership of the business. But both in a legal sense and in a tax sense, the two are distinct.

An asset purchase is where the buyer takes ownership of the key business assets, such as the premises or its lease, its contracts, its intellectual property rights, and so on. In short, everything that is necessary for the day to day running of the business is bought out.

Depending on the precise deal struck, either some or all of the assets may change hands. The seller could wish to retain ownership of the business premises, for example, and instead issue a lease to the buyer. These details should be made clear before the buying process begins.

 

What Is a Business Share Sale Agreement?

A share purchase is where a buyer buys all of the business’ shares. Legally speaking, a limited company is its own private entity; that’s why property and other assets can be bought in the name of a business, and why a limited company owner is protected in the event of the business’ bankruptcy.

Either way, when a buyer buys all of the business’ shares, they gain complete control of the company and everything that belongs to it.

When you buy a company through a share purchase, you have to sign a share purchase agreement. This sets out any terms that the buyer and seller agree. As you can imagine, these agreements can be long and complex, particularly if the seller stipulates certain terms, if the business is complex itself, and if the payment terms are high or are deferred.

 

Which Is Better: Share Purchase or Asset Purchase?

The core difference is that in a share purchase, the buyer takes on the entire business, liabilities and all; in an asset purchase, they have the option of not buying particular parts of the business. For a simple example, the buyer may wish to buy the premises, but outfit it with new machinery; or they may want to buy the machinery and intellectual property rights, but move the business to a new location, and so will avoid buying the premises. As a result, asset deals are more common than share deals as they give buyer and seller greater flexibility.

Other advantages and disadvantages are as follows:

 

1) No Shareholder Troubles with Asset Purchases

In a share purchase, the buyer will usually purchase every share issued of the target company. They will therefore need the approval of every selling shareholder, which can be difficult if a) the shareholder(s) are not traceable or b) if they do not want to sell.

In an asset purchase, this isn’t necessary. The company that owns the assets will conclude the sale; this is subject only to director approval, not to shareholder approval. It is possible for a shareholders agreement to prevent the sale, but this is highly unlikely.

 

2) No Need to Identify Every Asset

Another reason to consider a share purchase is that it’s typically a lot simpler.

The core issue is that in an asset purchase, you need to identify each asset and liability of the business. You then have to consider which assets you would actually want to buy as part of the sale, and then come to an agreement with the seller with regards to them. A share purchase is much simpler; all you buy are the shares, and everything comes along with them.

Another advantage here is that in a legal sense, there may be specific formalities you have to adhere to depending on the kind of asset being bought. Property isn’t bought in the same way as a contract, or third-party consent to a change of control, for example. While this is work more for your lawyer or accountant than for you, it nevertheless makes the buying process more complex.

 

3) The Due Diligence Process

On the other hand, due diligence is typically more complex for a share purchase than for an asset purchase.

If you don’t know yet, due diligence is the research process that tells you everything you need to know about the business before you buy it. Because a share purchase involves buying the entire business outright, there is more due diligence (and perhaps due diligence of different kinds) that must be done when compared to an asset purchase.

 

Contact Chelsea Corporate Today

At Chelsea Corporate, we can help you find and buy businesses for sale. We specialise in off-market sales—where businesses are bought and sold without ever being officially listed for sale online or in print. As well as bringing you these golden opportunities, we can advise you on buying whichever business you’re interested in, whether it’s your first time or you’re a seasoned buyer.

So, why not consider contacting us today, either through our contact form or over the phone? We’re looking forward to hearing from you!

It is common practise in the context of a business sale for the seller to stay with the business for a period of time. This may be a set period of time, e.g. six months, or until a new product or service launch; or, it may be until a certain goal is met, such as a set net profit percentage increase year on year. If you are planning on buying a business, you can look to agree with the seller how long they should stay on, and develop a business transition plan that you each agree on. But what is a good length of time, or should they even stay on at all?

Below is an overview of the pros and cons of the most common business transition strategies. Which one you pick is up to you.

The Seller Leaves Upon Completion

One option is for the seller to move on as soon as the sale is completed. They may be eager to move on to a new project, and you may be eager to make the business your own. This is the default option unless you each specify that you would like the seller to stay on for a period of time. There are major pros and cons to this approach.

Pros:

You can immediately start changing company culture. If you have a particular way that you like to run your business, and the previous owner is uncomfortable with it, this can cause conflict.

You can approach the business with a fresh vision. You may wish to take the company in a different direction, e.g. making or selling something new, winning larger clients, or just doing things differently. The seller may have their own vision for the business, which is often, partly, the reason why they stay on after selling.

You don’t have to pay the seller for their time. When the seller stays on, it is typically because the buyer offers them a performance-contingent bonus. If you don’t keep them on, you don’t have to pay them.

Cons:

You choose not to benefit from the guidance of the seller. Depending on the experience of the seller, they may have been a part of the industry for many years. They can give invaluable guidance on what to do and how to do it if they stick around.

You choose not to build a business relationship with the seller. Although the seller may be moving on, they may simply be starting a new project, or may return to the industry one day. By building up a working relationship with them you may in time create a valuable contact. You could also leverage the seller’s contacts.

The seller may not want to. In the case of a family business transition, the seller may not want to leave immediately; if their moving on is a necessary condition in your negotiation, they may refuse to sell to you.

The Seller Stays for a Contingent Bonus

Alternatively, the seller could stay on. But there are multiple ways in which you can arrange this.

One way is to offer the seller a contingent bonus. A contingent bonus is a bonus paid out when certain goals are met. That could be a percentage improvement in year-on-year net profit; it could be the successful launch of a new product or service; or, it could be anything else you might want. This is typically over a set term, but you could arrange them to stay on until the figures are hit or the launch commences.

The terms of the bonus are for you and the seller to decide. But the pros and cons remain the same.

Pros:

The bonus will be contingent on something that benefits the business. It’s a win-win scenario: the seller gets a bonus, and the business transition process is successful.

You can enjoy the expertise and advice of the seller. This can set you in good stead moving forward.

The prospect of the bonus can be used as part of purchase negotiations. You can use them to negotiate the sale price lower. As a simple example, you could offer £80,000, the seller requests £100,000, and you counter offer £85,000 with a £10,000 contingent bonus.

Cons:

You will have to agree a fee to make it worth the seller’s time, and that could be substantial. You could aim to achieve the same target, but without the seller’s involvement, saving money.

You and the seller may step on each other’s toes unless you clearly define your roles. The seller may view the business as ‘their baby’, and not take easily to letting go of the reins.

The Seller Stays On in a Different Role

Finally, you could consider having the seller stay on in a different role. This could be as a board member, as an adviser of some kind, or in an unofficial capacity. Again, the terms of this arrangement are for you and the seller to decide; you can do whatever you’re comfortable with.

Pros:

The seller could stay on long-term; as long as you need them. You could arrange for them to stay on for years, or even indefinitely.

Cons:

The seller may not adjust to being in a different role. If they’re used to calling the shots, they may not enjoy taking a back seat.

How Long Should The Seller Stay On After They Sell?

There are no right or wrong answers. They should stay on for as long as you each agree that they serve a useful role.

Even the pros and cons above don’t always apply as the size of the business, the industry in which the business operates, and even personal factors can prove more important.

It’s for that reason that we recommend talking to Chelsea Corporate before making any decision. We make buying a business quick, easy, and painless process! We can talk with the seller on your behalf, offer advice based on our years of experience, and give you everything you need to thrive when buying a new business.

So, why not consider contacting us today, either through our contact form or over the phone? We’re looking forward to hearing from you!

A private equity buyer is a firm that pools money from many investors to buy private companies, rather than public ones. These acquisitions are made outside of the stock market through direct purchases or mergers.

The goal of a private equity buyer is not necessarily to maximise short-term returns, but rather to minimise risk and improve the value of a company over time. In order to accomplish this, PE firms often have more freedom than other companies in structuring their deals. Therefore, they can negotiate more favourable terms for themselves such as guarantees to cover any future indemnities and other forms of insurance.

If you are looking to buy a business, you don’t need to incorporate a private equity firm to do it. You can simply buy the business, either through buying its assets or shares. But if you would like to make a similar kind of investment, and receive expert advice too, then consider consulting with a private equity firm instead.

 

Where Do UK Private Equity Firms Get Their Money?

A private equity firm’s ability to buy businesses is based on its own capital, which it raises from the individuals and institutions that invest in their funds.

This capital consists of two main types.

The first is referred to as committed capital or permanent equity, which are the funds that have been raised but not yet invested by the PE firm. The second form of capital comes from realised profits within a fund’s portfolio. This money can either be recycled into new acquisitions through a secondary purchase, or it can be returned to investors as a dividend.

 

Why Do Private Equity Funds Buy Businesses?

A private equity buyer will generally purchase a business when it believes that there is value in its operations and management team, and that the company can be improved and eventually sold at a higher price; or, that it will continue consistently making money and eventually recoup the cost it was bought for.

The underlying point is that PE firms are an alternative to the stock market. They offer more regular or higher investment potential than stock for their wealthy clients.

 

How Businesses Attract Private Equity

The acquisition of a privately-held business by an outside party is commonly referred to as a buyout. The best way for a company owner to attract private equity interest is to ensure the company has sound financials, and that it has potential for growth in the future. In all ways, the company must be made as simple and profitable an acquisition as possible; business owners must:

• Audit their financials
• Win a broader customer base/more clients
• Fill obvious gaps in their team
• Enter new and profitable markets
• Protect their intellectual property rights if necessary

Other than that, it’s a game of networking, recognition, and marketing.

 

Private Equity vs. Venture Capital

Strictly speaking, the two aren’t that different. Venture capital is by definition a form of private equity. But they aren’t the exact same thing.

Venture capitalists are designed to help finance new, unproven organisations with high growth potential, while private equity investors usually provide funding for more established businesses that they believe they can improve and resell at a profit.

A venture capitalist will usually provide smaller amounts of equity capital in exchange for a claim to the business’s future profits, while private equity investors tend to use large cash sums as leverage to gain significant control over the company.

 

Private Equity vs. Buying a Business

Investing in a private company through a PE firm is very different from simply buying a business outright. The terms of a deal, and the expectations within it, are very important. The purchase of a company can be much more complex than just paying money for assets. Key differences include:

Speed: A private equity firm’s investment will usually be completed far more quickly than a purchase of a company, with less need for additional financing.

Control: As an investor through a private equity firm, you do not control the businesses that are bought. When you buy a business outright, you can do what you want with it.

Return on Investment: The return you’ll receive on investment in a private equity firm will be less than if you buy an entire business. However, the risk of losing money is also lower.

As you can imagine, for some people, private equity might be the better option; for others, buying the business outright.

 

Contact Chelsea Corporate Today

At Chelsea Corporate, we help people buy businesses. We identify off-market opportunities, vet them, and present them to our clients–making the process quicker and easier than ever. We can talk with the seller on your behalf, offer advice based on our years of experience, and give you everything you need to thrive when buying a new business.

So, why not consider contacting us today, either through our contact form or over the phone? We’re looking forward to hearing from you!

If your business is doing well, you might be considering buying another one to gain control of your supply chain; or, you may be looking to enter into a new industry. If so, then you can consider applying for a loan from a lender specialising in business finance.

That being said, loans for buying a business are quite complex, and you should always get expert advice before going ahead. And like all forms of finance, there are risks involved. They aren’t always the right answer.

Let’s take a look at a brief step-by-step guide on getting a business-buying loan, and then some of the pros and cons of financing your expansion.

 

Step 1: Determine Your Needs

Before you approach a lender, it’s a good idea to have a handle on exactly how much money you need, and what for. You can identify businesses that you would have interest in buying, figure out a likely cost or an average cost, and seek finance for that amount.

At this stage, you can compare costs and benefits. You may find that vertical growth will give you a better return on your investment, but may be more expensive in the short term, for example.

 

Step 2: What Kind of Loan Do You Want?

There are different sources from which you can acquire a business loan, or funding in a more general sense. This means that if one avenue is closed to you, another may be open that you could consider:

• Bank loan to buy a business (UK)
• Credit unions
• Seller financing
• Private investors/angel investors
• Friends and family

Evaluate your options carefully, preferably with a financial professional, before you make a decision.

 

Step 3: Identify the Loan Terms You Can Get

The next step is to compare your borrowing needs with your financial capabilities. You can do this by talking with several lenders at the same time and getting a best offer comparison. Loan terms vary, as in all kinds of finance, and the lowest rate deal may not offer the flexibility that you need.

The point of this step is to help you identify whether your plan is affordable. If the terms of the loan and its repayment are beyond what you can pay, then you should look at other routes, such as building a start-up from scratch or looking for funding elsewhere.

 

Step 4: What Do Lenders Need From You?

Now you know your financial situation, it’s time to get in touch with lenders and find out more about their requirements. Again, as in other kinds of finance, business finance lenders won’t just lend to anybody. Lenders typically require the following information:

1. Proof of identity
2. Income documentation or cash flow statements for the last six months
3. Personal tax returns and documentation on any debts you may have

Talk to your potential lender about what you’ll need and get it ready in advance.

If you already own a business, then you will need to provide information on that too, such as a financial statement. Talk with your accountant and they can arrange everything for you.

 

Step 5: Applying for the Loan

Once you have all your information together, contact your potential lender and go through their application process. If you have ever applied for finance of any kind before, you will already know that this can be a laborious process; applying for a loan to buy a business is no different. Be prepared to be rejected, to have to send and resend lots of paperwork, and to find the application stressful.

Some lenders will allow you to apply online, while others won’t; if this is something you value, shop around and pick a lender that does.

 

How Long Will It Take?

Once you apply, the whole process typically takes anywhere between four to eight weeks. Lenders need to conduct an in-depth analysis on your creditworthiness and, if applicable, that of your business. That said, some may take longer than others; it depends on a number of factors, such as your credit score and the financial strength of your business.

 

Contact Chelsea Corporate Today

As you can see, getting a loan to purchase or expand your business is not as straightforward or quick as it may sound. Even so, there are many benefits that come with putting the right deal in place.

At the same time, there are reasons why finance might not work for you. We don’t need to elaborate on how and why taking out finance can go wrong.

As such, it’s vital that you have business buying experts on your side before you make a decision. For more advice on these kinds of topics, contact us today.

 

What is a turnkey business? A turnkey business is one that can open and operate, or continue operating, immediately after purchase. This is as opposed to a business that needs to hire new staff, purchase machinery or the rights to manufacture products, needs to find a premises to operate from and so on. They require a minimum of effort on the part of the new owner to make money, and are therefore highly sought-after in the context of business buying.

The guide below first addresses the finer points of the meaning of a ‘turnkey business’, before running through examples of turnkey businesses in different industries.

Turnkey Business: Meaning

A turnkey business is one that is ready to make a profit from the moment a buyer takes ownership of it. The term ‘turnkey’ is probably an analogy to driving a car; all you have to do is turn the key in the ignition and drive. In the same way, a turnkey business is ready to make you money from the moment you lift the shutters and open the door on a Monday morning.

Not all businesses for sale are turnkey businesses. So, for example, the buyer of a turnkey business will not need to:

• Refurbish its offices or premises
• Purchase machinery vital to the operation of the business
• Contact suppliers and purchase stock
• Pursue a marketing campaign to earn their first customer or client
• Recruit and train staff

In other words, a turnkey business is an established business that can continue operating as-is following a change of ownership. While there is no formal definition of a ‘turnkey business’, buyers are advised to check whether their target requires growth or an overhaul before it can make a profit for them.

Is There Really Such a Thing as a Turnkey Business?

Not every business for sale as a ‘turnkey business’ really is one. That’s because both brokers and owners know that buyers are looking for opportunities that can immediately start making them money. There will always be an incentive for a seller or a broker to gloss over issues like the need for new staff, new machinery, or other expensive problems.

That, however, does not mean that there is no such thing as a turnkey business. It is perfectly possible to find genuine turnkey businesses for sale should you know where to look.

Examples of Turnkey Businesses

To better understand the definition and value of a turnkey business, here are a few examples.

Online Turnkey Businesses

An online turnkey business would be one that already has a fleshed-out online store, has existing suppliers in place, and has an established position in search engine rankings.

Take an ecommerce business for example. A turnkey ecommerce business would have an existing relationship with suppliers e.g. through AliBaba or directly. Infrastructure to deliver goods to customers would also already be in place. Staff that liaise with suppliers and customers would be retained to ensure a seamless provision of service throughout the change of ownership.

The value of an online business being a turnkey business is less than in other industries. That’s because barriers to entry are relatively low, as is the cost of establishing a website as opposed to physical premises. It is nevertheless easier, at least, to buy and run a turnkey online business than one which is yet to be fully established.

Manufacturing Turnkey Businesses

It is far more meaningful to buy a turnkey manufacturing business. That’s because companies that manufacture things require machinery, trained staff, large premises and strong relationships with buyers of their products. It is far easier to set up and establish a website than a manufacturing concern.

A turnkey manufacturing business would already have:

• Machinery that can be used to manufacture goods
• A relationship with a supplier for raw materials
• A team of trained staff who can operate the machinery
• Management staff e.g. line management, HR and health and safety
• A premises in which to manufacture things
• Patents and intellectual property rights

A buyer could continue to utilise these resources after purchase. So, an example manufacturing turnkey business could be one that makes cutlery. The new owner could, should they wish, carry on making the same cutlery with the same machinery and the same staff.

Franchise Turnkey Businesses

Another good example of a turnkey business is a franchise. Many businesses with a franchise model will assist a new franchisee by branding their premises, hiring staff, presenting systems for payroll and similar, and generally taking care of everything that a new business owner would have to do. Not every business using a franchise model will do this for a franchisee, and this is typically reflected in the initial setup cost.

How to Find Turnkey Businesses for Sale

Most businesses in the U.K. are sold without them ever being officially listed for sale. Instead, they’re sold on an ‘off-market’ basis. Rather than relying on advertising, sellers discreetly and confidentially discuss terms with their existing industry contacts. Unless you are a part of this inner industry network, you would never know the business is for sale; even then, sellers take pains to avoid alerting direct rivals to their sale.

In short, this means that potential buyers—and especially overseas buyers—miss out on the best turnkey business opportunities before they even become aware of them.

Buy a Business with Chelsea Corporate

Welcome to Chelsea Corporate. Our expertise is in identifying and securing off-market opportunities for business buyers.

An off-market deal is one made without the business officially being listed for sale. As specialist brokers, we identify and approach businesses with owners discreetly looking to sell. We then connect our buyers with this hidden market they would otherwise not have access to. Off-market deals have several advantages both for the buyer and the seller: the seller benefits because they only need deal with serious buyers, while buyers can request a fair price and avoid the competition they would find in a public sale.

If you’re interested in how to buy a turnkey business—whether you’re looking to expand your own business, or you’re an overseas buyer interested in British businesses—contact us today. You can reach our expert team over the phone at +44 (0) 20 3011 1373. Alternatively, fill out our contact form or email us at info@oldchelsea.fusionanalyticsworld.com.

Buying a business isn’t something you should do lightly. One reason for that is the sheer amount of regulation involved, particularly in certain industries.

So, can anyone buy a business? The guide below takes a look at some of the FAQs potential business owners could learn from, touching on experience, regulatory hurdles, debt, finance and more.

Should You Buy a Business as a Beginner?

One of the most common questions asked is whether buying a business is a good idea as a complete beginner. Perhaps you’ve never owned a business before and would like to move away from a regular job and do something more exciting.

Unfortunately, the sensible answer is that this is normally a bad idea, and for several reasons:

• Your competitors will be at home in the industry and know far more about it than you. While you’re still learning the ropes, they will be implementing strategies you haven’t even heard about.
• You may fall foul of regulatory issues unless you hire outside help like a broker or a lawyer. This represents a significant hurdle to entry to the market.
• Buying a profitable business is expensive. You will have to work through initial costs and/or debt from the acquisition until the business can make you significant money (an issue you may not face should you start your own business).

As brokers, we would advice you to think very carefully before buying a business as a complete beginner.

Should You Buy a Business or Start Your Own?

What may make more sense is to start your own business. Starting from scratch presents costs of its own, but it’s possible to slash these costs by taking a lean and agile approach.

So, if you’ve never run a business before? Start your own and see how it goes. If you’ve run lots of businesses in your time, buying one may be the better idea.

Do You Need a Licence to Buy a Business?

You don’t need a licence to buy a business from somebody. But you may need a licence to run it.

Take a pub as a simple example. You need a licence to be able to serve alcoholic drinks. According to Gov.UK, premises licensed to sell alcohol must have a designated premises supervisor, and that supervisor has to have a personal license. Other businesses that require licences include childcare, pet breeding, gambling services, taxi driving, running a business that serves food and lots, lots more. If you don’t have one of these licences/can’t employ somebody who does, then you shouldn’t buy a business in that industry.

How Can I Buy a Business with No Money?

It is possible to buy a business with no money. It’s common for mergers and acquisitions to be made on the basis of finance. There are several forms of finance you can use: bank loans, crowdfunding campaigns, seller finance and more. Like all forms of finance, finance for buying a business depends on your credit, and you may be turned away by lenders based on your credit history.

Whether finance is the right option for you depends on your circumstances. As a specialist off-market broker, our job is to find, vet and approach businesses for potential buyers, not to advise on finance decisions. This is a decision to be made with the utmost care, preferably with the assistance of a financial advisor of some kind.

Can You Buy a Business with Bad Credit?

It is possible to buy a business if you have bad credit, in one of two ways.

One way is to buy a business outright. If you have enough money in the bank to meet the seller’s asking price, then bad credit (and good credit, for that matter) is immaterial. This, of course, is not an option for everyone.

It may also be possible to find finance through a more accepting lender. Be careful, though, as lenders for people with bad credit will likely charge a high interest rate.

Can You Buy a Business When You’re in Debt?

Again, it is possible to buy a business outright if you have the money in the bank to do so. When paying outright your credit rating and/or debt have no bearing on the deal.

What will be more difficult is to find finance for your acquisition. Not only will it be more difficult, but it’s likely not a good decision either (although this depends on your unique circumstances). Talk to a financial advisor to ascertain the best course of action.

Buy a Business Through Chelsea Corporate

If you’ve never bought a business before, doing so through a dedicated specialist broker like Chelsea Corporate will save you both time and stress.

Our particular speciality is in off-market sales. An off-market sale is where a business is bought and sold without ever officially being advertised. We can identify and approach these businesses on behalf of our buyers, letting them into a hidden market through our exclusive database. We vet each one of them for its profitability and sustainability. The businesses we give our buyers access to are available nowhere else but through us.

To learn more about what we do, contact us today over the phone at +44 (0) 20 3011 1373. If you prefer, reach out through our contact form or email us at info@oldchelsea.fusionanalyticsworld.com.

There are four core merger and acquisition strategies that you can use to expand your business. Each has its advantages depending on what the buyer is looking to achieve, e.g. dominance of an existing market, entrance into a new market, or teaming up with the competition.

This guide details each business buyer strategy, looks at which is best used when, and how a broker fits into the equation.

Horizontal Merger

A horizontal merger is a merger between two companies with similar products and similar audiences. The idea is that by coming together, the two companies can increase their reach. As such, these mergers are made between competitors.

An example of a horizontal merger would be if Apple and Microsoft merged. They each make personal computers and other tech, but the merged business would benefit from Microsoft’s dominance of the office environment, which combined with Apple’s big slice of the smartphone market would create a very large company indeed.

Alternatively, consider how large businesses expand by absorbing start-ups in their industry, or how some start-ups get bigger by buying up their competitors.

When Is a Horizontal Merger Useful?

A horizontal merger earns a business a bigger slice of the pie in the industry it’s in. It does so by earning business from brand-loyal customers of the acquired business, by incorporating or discontinuing the acquired business’ products, and by pooling together the two business’ marketing and advertising budgets to increase reach. Horizontal mergers are useful both for small and large businesses.

Vertical Merger

A vertical merger is where a business merges with another business higher up in the supply chain. These companies aren’t necessarily competitors; in fact, they may have an existing supplier relationship.

An example of a vertical merger is easy to think of. A smartphone manufacturer might buy a business that makes chips, screens or other components. A car manufacturer might buy the business that supplies them with car parts.

When Is a Vertical Merger Useful?

The point of vertical mergers is to control the supply chain. If a business can control its supply chain, it can cut its costs dramatically, and gain a significant advantage over the competition.

Take a car manufacturer for example. Its supplier provides it with parts at a price point above the cost of manufacture so that it can make a profit. Should the car manufacturer buy out its supplier, it can then supply itself with parts at cost, representing a significant saving. It can also take cost-cutting measures to further increase revenue such as sourcing raw materials at a lower price.

Concentric Merger

A concentric merger is a slightly different version of the horizontal merger. A concentric merger is where both businesses sell to the same customers, but they sell different products. As such, they are only indirect competitors, but are again looking to increase their reach and the size of the market they sell to.

Again, there are plenty of examples of concentric mergers from tech. If a software manufacturer merged with a hardware manufacturer, they could push into the home computer market.

When Is a Concentric Merger Useful?

A concentric merger increases a business’ reach in its core audience. The alternative is to design a product, arrange for its manufacture, market it and so on; while still complex, a concentric merger is a quicker and easier way to do the same thing.

Conglomerate Merger

Last but not least, a conglomerate merger is where two businesses with nothing in common merge. Examples of conglomerate mergers include Coca-Cola, Disney and other multinationals: they expand into new and profitable markets that may have nothing to do with their initial markets.

None of these expansion strategies is inherently better than the others. Which one you employ depends on how big your business is, what you’re looking to achieve, and what’s possible in the current economic climate.

When Is a Conglomerate Merger Useful?

Conglomerate mergers are most useful for larger businesses that can afford to take on risk. They can use their reputation and brand to ensure that they are successful in a new industry; name recognition goes a long way. Unless your business has already expanded vertically, there is less risk and perhaps just as much reward to be found through other strategies.

Broker vs. No Broker

No matter how you’re looking to expand, the most important question is whether you use a business broker or not.

If you own and operate your own business, it may be tempting to try to expand on your own, too. This comes naturally to business owners: it’s part of the job to be self-reliant. It may be what helped you grow your business from nothing to what it is today.

That being said, there are many things that even seasoned business buyers can get wrong. Due diligence pertains not just to the profitability of the business and its future expansion, but to regulations, which can be stringent in particular industries. There is no recompense should you fail to conduct thorough enough due diligence, meaning that a new buyer, or a buyer approaching an unscrupulous seller, stands to lose a large amount of money should something go wrong.

Buy a Business with Chelsea Corporate

Buying a business through a dedicated mergers and acquisitions specialist like Chelsea Corporate will save you time, money and stress.

We specialise in off-market sales, which is where a business is bought and sold without it ever officially being listed for sale. We find, vet and approach businesses with owners that may be looking to sell. Rather than bring them to market like other brokers do, we connect them with buyers through our exclusive private database; in other words, the businesses we offer to buyers aren’t available anywhere else, online or off.

If you want to know more about off-market and how it might benefit you, either as a business owner or as an overseas buyer, contact us today. Our expert team are available over the phone at +44 (0) 20 3011 1373. If you prefer, reach out through our contact form or email us at info@oldchelsea.fusionanalyticsworld.com.