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Buying a business: steps, tax implications and pitfalls to avoid
Buying a business is a major milestone in an entrepreneur’s journey. Whether you are looking to open your first clothing store, take over a restaurant, or expand a network of B2B sales outlets, this legal and commercial process should not be approached lightly. But in practical terms, what does buying a business mean? It involves acquiring a collection of movable assets—both tangible and intangible—assembled by a business owner to build and retain a customer base.
To understand how to buy a business properly, it is essential to master its definition, financial valuation, legal framework, and administrative requirements. This comprehensive guide outlines all the key steps involved in buying a business while helping you secure your investment.
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🕐 6 min of reading | Published on: 06/02/2026
Purchase of a business: what you really buy
Items included in the assignment (intangible and tangible)
When you decide to purchase an existing business, you are not buying the premises themselves, but an operating business entity. This entity consists of two main categories of assets:
Intangible assets (the most strategic elements):
- The customer base and goodwill: the very essence of the business, without which it has no legal existence.
- The trade name and business sign: the local or national reputation associated with the establishment.
- The leasehold rights: the right to occupy the commercial premises and benefit from the protections granted under the commercial lease agreement.
- Employees’ employment contracts, as well as any patents, trademarks, and operating licenses (such as a liquor license for establishments serving alcoholic beverages).
Tangible assets:
- Vehicles, technical equipment, tools, machinery, and commercial furniture and fixtures.
Important note: Inventory and stock are valued separately and are subject to an independent inventory assessment. They are generally purchased in addition to the business sale price on the day the transaction is finalized.
What is not transmitted and the fate of ongoing contracts
The purchase of a business is not the same as a company merger or acquisition. Unless otherwise specified in the sale agreement, certain elements remain the exclusive property of the seller:
- The previous owner's receivables and liabilities.
- Non-mandatory contracts (insurance policies, non-essential service agreements, etc.).
- Cash reserves and bank accounts.
- Real estate assets (the commercial premises themselves).
With regard to contracts, the law generally requires the automatic transfer of existing employment contracts and the commercial lease to the buyer. Other agreements—such as supplier contracts, maintenance agreements, and service contracts—must be reviewed and negotiated on a case-by-case basis.
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How to evaluate a business and set the right price
Value, prices and evaluation methods to be crossed
To successfully complete the acquisition of a business, you must determine its fair market value. Our comprehensive guide on how to value a business explains the four recognized methods used to obtain a reliable valuation.
- The revenue-based method: this approach applies an industry-specific percentage, derived from professional valuation benchmarks, to the average turnover generated over the previous three years.
- The profitability (EBITDA) method: widely favored by lenders and investors, this method calculates the business value by applying a valuation multiple (typically between 3 and 5) to the adjusted EBITDA, reflecting the company's actual ability to generate profit.
- The asset-based method: this method assesses each component of the business separately and then combines them to determine the overall value. It is particularly suitable for struggling or inactive businesses.
The criteria that weighted valuation (location, lease, clientele)
The final purchase price of a business is heavily influenced by several qualitative factors:
- Location: a high-footfall pedestrian area in a city center will command a significantly higher value than premises located on the outskirts of town with limited accessibility.
- The condition of the commercial lease: a lease that has recently been renewed for a further nine-year term provides greater stability and visibility than a lease nearing expiration, where there may be a risk of increased rent.
- The strength of the customer base: is it loyal, volatile, or aging? Does the business rely on a small number of major B2B clients, or is revenue generated from a diversified customer base?
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The stages of purchasing and the professionals to involve
Buying a business involves a structured process that typically unfolds over several months:
- Target identification and initial due diligence: reviewing the seller’s financial statements, including the last three years of balance sheets and profit-and-loss accounts.
- Negotiation and submission of an offer: formalizing a written proposal, usually subject to specific conditions precedent.
- Signing the preliminary agreement (or sale agreement): a legal document that commits both parties to the transaction.
- Fulfilment of the conditions precedent: securing financing, obtaining any required approvals, and completing any applicable pre-emption procedures.
- Signing the final deed of sale.
To successfully complete the acquisition, it is essential to work with experienced professionals. An accountant can assess the financial viability of the business, a business lawyer or notary can ensure the legal security of the transaction documents, and a finance broker can assist in obtaining the necessary funding.
Securing the commercial lease and ongoing contracts
Commercial lease: clauses and points of vigilance before any offer
The commercial lease is the lifeblood of any brick-and-mortar business. Before deciding to purchase a business, carefully review the existing lease agreement and pay particular attention to the following points. Keep in mind that the quality of store layout and organization can have a direct impact on the profitability of the business and, consequently, on its market value.
- Permitted use of the premises: ensure that the business activity you intend to operate is fully covered by the lease agreement, whether through a broad “all business activities” clause or a more specific permitted-use provision.
- Rent and rent review mechanisms: review the rent adjustment formula and determine when the next scheduled rent review will take place.
- Restrictive clauses: pay close attention to approval clauses that require the landlord's consent before the business can be transferred, as well as continuing liability clauses that could leave you responsible for obligations after a future resale of the business.
Supplier, telecom, and maintenance contracts: what follows or not the fund
Unlike the commercial lease, supply contracts—such as those covering raw materials, utilities, internet services, IT maintenance, and other operational services—are not automatically transferred to the buyer. During the acquisition of a business, review these agreements with the seller to determine whether you wish to take them over through a contract amendment or terminate them in order to negotiate more favorable terms with new B2B suppliers and service providers.
Total cost: registration fees, ancillary costs and financing
Registration fees: scale, rebates and priority areas
In addition to the sales price, there are mandatory tax rates: registration fees. They are calculated according to a progressive scale based on the transfer price:
| Sale Price Bracket | Applicable Rate |
|---|---|
| Less than €23,000 | 0% |
| Between €23,000 and €200,000 | 3% |
| Above €200,000 | 5% |
Good to know: specific tax reliefs or reduced rates may apply if the business is located in certain priority development areas, such as rural revitalization zones or designated urban regeneration districts, or when the business is acquired by its employees.
Financing the purchase: contribution, bank loan, and recovery assistance
Understanding how to buy a business also means putting together a robust financing plan. Banks typically require a personal contribution of at least 20% to 30% of the total project cost (business acquisition, inventory, and related expenses). To supplement a commercial business loan, several financing options may be available:
- Seller financing: the seller agrees to defer payment of part of the purchase price, effectively providing a loan that is repaid over an agreed period.
- Public grants and financial support schemes: these may include government-backed entrepreneurship programs, interest-free business development loans, and loan guarantee schemes designed to facilitate access to financing for business acquisitions.
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Post-signature formalities and pitfalls to avoid
Timeline of mandatory formalities (act, JAL, BODACC, single window)
As soon as the sale agreement is signed, several mandatory administrative procedures must be carried out simultaneously. It is important to note that some deadlines run concurrently rather than consecutively.
- On the completion date: execution of the final transfer deed and deposit of the purchase funds into an escrow account.
- Within a maximum of 15 days:
- Tax registration with the relevant tax authority to pay the applicable transfer duties.
- Publication of a legal notice announcing the transfer in an authorized legal gazette or official publication serving the area where the business is located.
- Shortly after publication of the legal notice: publication in the official business announcements bulletin, which triggers the statutory period during which creditors may lodge objections to the transaction.
- In parallel: registration of the business takeover through the appropriate business registration portal in order to register the company or establish the new operating entity and obtain its official business identification number.
The frequent errors to anticipate in the deed of assignment
To ensure your business acquisition is a long-term success, avoid these three common pitfalls:
- Overlooking the non-compete clause: make sure the sale agreement expressly prevents the seller from opening or operating a similar business within a defined geographic area and for a specified period of time that could jeopardize your newly acquired customer base.
- Failing to verify pre-emption rights: check in advance whether the local authority has a commercial pre-emption right that could affect the transaction.
- Improper handling of the purchase price: the purchase price of a business should be held in an escrow account (typically managed by a lawyer or notary) for several months. This protects the buyer by ensuring that any outstanding tax liabilities or undisclosed debts of the seller can be settled before the remaining funds are released.
Once all legal and administrative formalities have been completed, you officially become the owner of your business. To maximize your chances of success from day one, explore our comprehensive guide on opening a business and learn how to prepare effectively for a successful launch.
💡 To remember:
- Inventory and stock are never included in the purchase price of the business. They are acquired separately on the completion date following a joint inventory assessment.
- The seller’s debts and receivables are not transferred to the buyer.
- The sale proceeds must be held in escrow for several months after completion to protect against outstanding liabilities and creditor claims.
- A non-compete clause is not automatic; it must be expressly included in the sale agreement.
- A commercial lease that is close to expiration can significantly reduce the value of the business.
- Before making an offer, have the last three years of financial statements reviewed by a qualified accountant.
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