A number of factors will affect the price you pay for a business. These include whether it operates from a freehold property, which you will own outright, or if you will be renting the premises. Usually the price of a business will be calculated as a multiple of net profit plus the value of any assets. Location can play a big role in the value of some businesses, particularly if you are purchasing freehold premises.

This depends on a number of factors, including what you can afford. If you want to buy commercial premises using a self-invested personal pension, or as an investment, then you will need to look at freehold properties. If your main interest is in growing the business rapidly, and having maximum flexibility, then leasehold could be the better option.

There are no hard and fast answers. If you just buy the assets then you don’t have to worry about any liabilities incurred by the previous owner. However, if you buy a company then the business will be able to carry on uninterrupted, and all the contracts the former owner had negotiated (for example with suppliers) will still be in place.

If you buy a business that is still trading then any staff will have the right to stay on with that business, whether you buy the company or just the assets. You might be able to make staff redundant if their skills do not match your requirements, but you should seek specialist legal advice before doing so. If you want to start from scratch with all your own staff it might be better to buy the assets of a closed business.

Buying a closed business gives you a blank canvas, but also means you will need to start from scratch in terms of suppliers, staff and, most importantly, customers. If you buy a successful going concern then all these things will be in place, and the price is likely to reflect this. There will also be a level of expectation that you should, as a minimum, live up to the standards set by the former owner.

Not all businesses are great successes, and sometimes you will find opportunities that are attractively priced because the current owners can’t make them work. Before buying a business like this you need to be satisfied that you know what is going wrong, and have a robust plan to put it right. Sometimes it could be as simple as changing the opening hours or introducing different product lines, but you need to be confident that you can make it work.

Whether you are investing your own money or borrowing to buy a business, you should satisfy yourself that the business will generate enough money either comfortably to cover your loan repayments or to provide you a healthy return on your investment. Our advisers can help you with this calculation and, if borrowing to fund the purchase is appropriate, can put you in touch with a range of specialist lenders.