Buying a business: be sceptical, then be thorough
Buying a business is the one moment you're allowed to be a pessimist. The optimists are the ones who find the problems after completion.
By Robert Festenstein, Head of Legal
Updated 25 June 2026
8 min read
The short version
- Share purchase = you buy the whole company, warts and all. Asset purchase = you cherry-pick and leave the liabilities behind.
- Due diligence is where you find the skeletons before they're yours.
- Warranties and indemnities move risk back onto the seller — negotiate them hard.
- Structure, tax and legal risk are the same decision. Take the advice together.
Share deal or asset deal
This is the fork in the road, and it changes everything downstream. Buy the shares and you buy the company itself — every contract, every employee, and every liability, including the ones nobody's mentioned yet. Buy the assets and you take only what you want, leaving the seller holding the stuff you don't.
Buyers usually prefer asset deals for the clean break. Sellers usually prefer share deals for the tax. Where you land depends on the numbers, the contracts and where the risk sits — which is why the legal and tax advice belong in the same conversation, not two separate invoices a month apart.
Kicking the tyres
Due diligence is just organised scepticism. It's the bit where you find out what you're actually buying, before the money leaves your account. A proper legal review goes looking for trouble in the usual places:
- Does the seller actually own what they're selling? (You'd be surprised.)
- Do the big customer and supplier contracts survive a change of ownership — or do they let the other side walk?
- What are the staff owed, and does TUPE apply?
- What's owned, what's leased, and on what terms?
- Any live disputes, claims or regulators sniffing around?
- Does the business own its brand, systems and know-how — or is it borrowing them?
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The paperwork that matters
A deal runs on a few documents. Heads of terms set the outline and the tone. The sale agreement is the binding contract, including how the price actually gets paid. The disclosure letter is where the seller quietly tells you what's really going on. And the warranties and indemnities are where a buyer's risk is genuinely managed — warranties are the seller's promises about the business; indemnities are pound-for-pound cover for specific known risks. This is the part worth fighting over.
Owning something that actually works
Completion isn't the finish line — it's the handover. Consents have to be in place, staff transferred properly, records updated. And if you're buying, the contracts and ownership arrangements for the new setup should already be drafted, so you own a business that's ready to run on day one rather than a project.
Frequently asked questions
What's the real difference between buying shares and buying assets?
Buy the shares and you get the company and everything in it, hidden liabilities included. Buy the assets and you take only what you choose, leaving the rest behind. The tax and risk consequences are big, so take it with legal and tax advice together.
Do I need due diligence if the seller seems honest?
Yes — it's not about honesty, it's about facts. Even a straight seller may not have the disputes, liabilities and contract traps front of mind. Due diligence surfaces them, and gives you the leverage to renegotiate the price or the warranties.
What are warranties and indemnities, in plain English?
Warranties are the seller's promises about the state of the business — if one's false, you may have a claim. Indemnities are specific, pound-for-pound cover for identified risks. Together they push risk back onto the seller, where it belongs.
Sources & further reading
This article is general information, not legal advice. The law changes and depends on your circumstances — always take advice on your specific situation before acting. Last reviewed 25 June 2026. Buzz Solicitors is a trading name of AD Solicitors Limited, a recognised body regulated by the SRA (no. 8011228).
A solicitor with more than two decades' experience in commercial law, dispute resolution, insolvency and judicial review. Robert acts for businesses, directors and individuals on the matters that carry real consequence — and leads Buzz Solicitors.
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