Buying or investing into a UK business

Investing into a UK private company

We have extensive experience advising and supporting international businesses and investors looking to acquire a UK business or invest in a UK company.

We help overseas investors navigate the UK acquisition process, including due diligence, transaction documentation, tax considerations and regulatory requirements. Drawing on our experience of working with businesses around the world, we provide practical guidance to help you understand the risks and requirements of investing in the UK.

How to carry out due diligence on a UK business

The process typically begins with heads of terms. From a practical perspective, due diligence often starts once the heads of terms have been agreed. For more information, see our guide to UK heads of terms.

There is no single prescribed order for conducting due diligence in the UK. The scope and timing of enquiries will depend on the transaction and the information available. We can establish and manage data rooms to coordinate the exchange of information.

Due diligence involves exchanging potentially sensitive and confidential information about the business and its commercial relationships. To protect both parties, a non-disclosure agreement is generally put in place.

Due diligence questionnaires help gather key information efficiently, covering areas such as financial stability, employees, disputes, regulatory compliance and cyber security. Once the initial findings have been reviewed, the parties will typically negotiate the share purchase agreement, with the due diligence findings informing the warranties, indemnities and other contractual protections required.

Key questions about the business

A targeted due diligence review focuses on the issues most relevant to your proposed investment. We tailor our enquiries to the business and the transaction. Common areas to investigate include:

• What is the company’s organisational structure?
• Are its Companies House filings up to date?
• Does the business operate in a regulated industry, and does it hold the necessary permits and licences?
• Who are the key individuals, what are their roles and how long have they held them?
• What is the company’s market position, who are its competitors and customers, and how strong are its relationships with suppliers?
• What are its operating costs and accounting policies?
• What debts and other liabilities does the business have?
• What financing arrangements and other financial agreements are in place?
• Are the employment contracts appropriately drafted?
• How many employees does the business have, and what are their lengths of service?
• What pension arrangements and other employee benefits are provided?
• Are any permits, third-party consents or licences required to operate the business lawfully?
• Is the business involved in litigation, regulatory investigations or other matters that could create reputational risk?
• Does the business deal with consumers, and what consumer protection laws apply?
• Does the company own registered intellectual property, such as trade marks and patents?
• Which websites and domain names does the company own or use?
• Does the business own any property or land?
• What plant and machinery does it own?
• Does it own or lease property, land or equipment, and what terms apply to those arrangements?

Data Protection

Data protection requires particular attention when acquiring a UK business. The UK has its own data protection regime, including the UK GDPR and Data Protection Act 2018, which differs in certain respects from the EU regime.

A buyer should investigate the target’s data protection practices, historic breaches, regulatory correspondence and compliance arrangements. Potential liabilities may arise from conduct predating the acquisition, and the expiry or limitations of contractual indemnities may leave the buyer exposed. We can help identify relevant risks and consider appropriate contractual protections. Further details are available in our guide to transactions involving companies with data.

Public corporate records

Publicly available UK records can help overseas investors investigate a target company and its directors. Depending on the circumstances, checks may include:

• Credit checks.
• Company, partnership and director searches.
• Online searches for relevant business, financial and reputational information.

These checks can provide a useful starting point, but they do not replace a full due diligence exercise.

Tax aspects of buying a UK registered business

We support overseas investors and parent companies acquiring UK businesses with the UK tax and corporate requirements that arise from the transaction.

A transfer of shares may attract UK stamp duty, depending on the nature of the transaction and any applicable relief or exemption. The amount payable is generally calculated by reference to the chargeable consideration, which may include deferred consideration. We can help assess the applicable requirements and ensure the relevant HMRC procedures are addressed.

Following completion, further steps may be required. These can include registering director appointments and other changes at Companies House, updating statutory registers and reviewing or amending the company’s articles of association. The precise steps will depend on the transaction structure and the changes agreed between the parties.

For overseas investors unfamiliar with UK requirements, coordinating these obligations can be challenging. We provide practical support to help manage the process and address the legal, tax and corporate requirements relevant to your investment.

Contact us to discuss your proposed acquisition or investment. We can help you understand the key issues, assess the risks and plan the steps needed to progress your transaction.