Buying a business in the United Kingdom

UK acquisitions are either a share purchase or an asset purchase.

In a share purchase, you buy the shares of the limited company that owns the business. The company carries on unchanged, so its contracts, licences, employees, tax history and liabilities stay inside it. Your protection comes from due diligence, from the warranties and indemnities in the share purchase agreement, and from the seller's disclosure letter, which lists the known exceptions to those warranties.

In an asset purchase (often called a business purchase), you buy the business and chosen assets from the company, partnership or sole trader that owns them. You decide which assets and liabilities to take, but each contract, lease and licence has to be moved across, often with someone else's consent, and employees usually transfer under TUPE. If the seller is a sole trader or partnership, there are no shares to buy, so an asset purchase is the only route.

Most deals start with heads of terms (a letter of intent in the US). These are usually not legally binding, apart from any confidentiality and exclusivity terms. Due diligence follows, then signing and completion. The price may be fixed through completion accounts or a locked box, and part of it may be deferred, held back as a retention or paid as an earn-out.

Companies House holds each company's filed accounts, directors and people with significant control. Since 18 November 2025, new directors and people with significant control have had to verify their identity with Companies House, and existing ones are being brought in over a 12-month transition period. Search the register early and compare what it shows with what the seller tells you.

Buyers usually combine their own money or investors' equity with debt and some deferred payment to the seller. Common layers include:

• bank term loans, often with security over the business and sometimes a personal guarantee
• asset-based lending secured on receivables, stock or equipment
• vendor finance (seller finance), where the seller is paid part of the price over time
• earn-outs, where part of the price depends on future results

The Growth Guarantee Scheme, run by the British Business Bank through accredited lenders, supports term loans, overdrafts, asset finance, invoice finance and asset-based lending of up to £2 million per business group for eligible smaller businesses. Whether a facility can fund an acquisition is a question for the lender. Financing an acquisition explains how the layers fit together and how lenders test affordability.

In a share purchase the employer does not change, so TUPE does not usually apply. Employees stay with the company on their existing terms.

In an asset purchase, the Transfer of Undertakings (Protection of Employment) Regulations 2006, known as TUPE, usually apply when a business or part of one moves to a new employer. Employees assigned to it transfer to the buyer automatically, with their terms and conditions and their continuity of employment. TUPE applies whatever the size of the business.

In England, Wales and Scotland, the seller must give the buyer employee liability information at least 28 days before the transfer. In Northern Ireland the period is 14 days, because the 2014 change that lengthened it did not apply there. The information covers each employee's name and age, their written statement of employment particulars, disciplinary and grievance records from the last two years, relevant collective agreements, and any claims made in the last two years or expected after the transfer. Employers also have duties to inform, and in some cases consult, the staff affected.

Take advice before you plan any change to terms, roles or headcount around a transfer, and see key staff not tied in.

• Stamp duty on shares. Buying shares usually carries tax of 0.5% of the price. For shares transferred on a paper stock transfer form, stamp duty applies where the transaction is over £1,000.
• Property taxes. If the deal includes land or a lease, Stamp Duty Land Tax can apply in England and Northern Ireland, Land and Buildings Transaction Tax in Scotland and Land Transaction Tax in Wales.
• VAT. When an asset purchase meets HMRC's conditions for a transfer of a going concern, no VAT is charged on the business assets. The conditions include that the transfer puts the buyer in possession of a business that can be operated as such, that there is no significant break in trading, and that the buyer is or becomes VAT registered where the seller is. Property brings extra conditions, so check them with your accountant.
• Historic tax. In a share purchase, the company's past tax liabilities come with it. Buyers usually rely on tax warranties and a tax indemnity, and see unpaid taxes a buyer could inherit.
• Merger control. Notifying the Competition and Markets Authority is voluntary, but it can investigate a merger after completion. Its tests apply where the business being bought has UK turnover of at least £100 million, or where the combined business would have at least 25% of a market in the UK or part of it, the deal increases that share and one party has UK turnover of at least £10 million, or under a hybrid test aimed at large businesses. Most small acquisitions fall outside these tests.
• National security. Under the National Security and Investment Act 2021, acquisitions of certain entities active in 17 sensitive areas of the economy, such as defence, energy, data infrastructure and artificial intelligence, must be notified to the government and approved before completion, whether the buyer is based in the UK or abroad. A notifiable acquisition completed without approval is void. The Act can also reach acquisitions of assets such as land and intellectual property.
• Licences and regulators. A premises licence for selling alcohol can be transferred to a new holder by application to the licensing authority. Anyone acquiring or increasing control of a firm regulated by the Financial Conduct Authority must notify it and get approval first. Other regulated activities have their own registration rules, so check with the relevant regulator early.

• A solicitor experienced in company acquisitions, for heads of terms, the purchase agreement, disclosure and legal due diligence, with employment and property specialists for TUPE and leases.
• An accountant or tax adviser, for financial due diligence, structure, VAT and stamp taxes.
• A corporate finance adviser on larger deals, to run the process and help raise finance.
• A business broker or business transfer agent, who usually acts for the seller.
• A lender or finance broker experienced in acquisitions.
• An insurance broker, for cover from completion and, on larger deals, warranty and indemnity insurance.

• Decide between a share purchase and an asset purchase with advice, before heads of terms.
• Search Companies House for filings, directors, people with significant control and registered charges.
• Confirm whether the deal qualifies as a transfer of a going concern for VAT, and record it in the agreement.
• Get the employee liability information and plan how staff will be informed.
• Check landlord consent for the lease and the transfer process for every licence and key contract.
• Check whether the business works in any of the 17 sensitive areas and needs a mandatory notification.
• Agree the warranties, the disclosure letter, limits on claims, any retention and the seller's restrictive covenants.
• Work through the diligence document request list and Due diligence: what to check and in what order.

If you want a listing's figures and public records checked before you instruct advisers, see what's in a dossier.