Buying a business through a merger or acquisition is a strategy for acquiring either an entire business or part of it. An acquisition involves taking over total control. A merger with another business integrates the business of one company with that of another. This results in shared control of the combined businesses.
The rules for mergers and acquisitions are covered by the Enterprise Act 2002 and the Companies Act 2006. Mergers between UK and overseas companies are governed by the Companies (Cross-Border Mergers) Regulations 2007.
Buying an existing company, with an already established structure, can be a good way of expanding your business.
UK merger control law does not require that a qualifying merger be notified to the Office of Fair Trading (OFT), the UK's competition and consumer authority. However, companies can seek legal certainty by informing the OFT about a prospective merger in advance so as to obtain clearance (it encourages companies to contact it early in the merger process).
The OFT refers completed and anticipated mergers to the Competition Commission for further investigation if it believes that it is or may be the case that:
- a relevant merger situation has been or will be created; and
- the creation of that situation has resulted, or may be expected to result, in a substantial lessening of competition within any market or markets for goods or services in the UK.
Local and national newspapers and trade journals advertise UK businesses for sale. Prospective buyers can also place advertisements specifying the type of business they want. Online versions of magazines such as Daltons or Businesses for sale - UK are also useful.
Information about an existing business can be found at Companies House Direct.
Business Link provides information, guidance on the different stages involved in merging with or acquiring a business.
Practical advice on key regulations, licences and standards applicable to specific business categories is available via Business Link's interactive tool 'Your type of business'. The tool also lists key trade bodies with expertise in specific business areas.
Professional advice from a solicitor and an accountant can be helpful during the different stages of buying a business.
Companies and entrepreneurs wanting to understand and access government-funded grants, subsidies and advice for starting up or increasing their business can find the relevant information on Business Link.