Most people who look at buying a business stall on one assumption: to buy a £1m company, they need £1m in the bank. Small UK deals rarely work that way. The price gets split between cash on completion day and payments made later out of the business's own profits, with bank debt filling part of the gap.
You'll also hear "buy a business with no money" from half the acquisition courses on the internet. The real mechanics are more useful than that slogan, and riskier, so this guide covers both. If you're still weighing up whether to buy at all, start with the case for acquisition.
This is general information, not financial, tax or legal advice. Every structure below carries tax consequences and personal risk that depend on your circumstances. Before you sign anything like them, hire an accountant and a solicitor who do transactions for a living.
Why sellers accept payment over time
Start with the seller's position, because the whole structure rests on it.
A retiring owner of a small company has a short list of possible buyers. A firm turning over £2m in a market town is too small for private equity and often too local for a trade buyer. That describes most UK businesses: of 5.7 million private sector businesses at the start of 2025, all but about 47,000 had fewer than 50 employees (gov.uk, Business Population Estimates 2025). A broker listing can take a year or more, with no guarantee of a buyer at the end. If you walk away, the owner's next option may be a wind-down, or five more years of work they'd hoped to avoid.
From that chair, a solid payment on completion plus the balance from future profits can be the best route to what the owner wants: the business carries on, the staff keep their jobs, and the total beats anything a closure would return. Deferred payment is common practice in small-company sales for that reason, and a seller's adviser won't treat it as a red flag.
The building blocks
Most deals mix several of these.
Cash at completion. The payment the seller receives on the day. In small UK deals it covers part of the price, and the size of that part is one of the hardest-fought numbers in the negotiation.
Deferred consideration. A fixed slice of the price, paid on a schedule after completion: equal instalments over three years, say. You and the seller agree the amount up front; only the timing moves. You get to pay partly from the cash the business generates. The seller gets a predictable income and a reason to make the handover work.
Earn-outs. A variable slice, paid only if the business hits agreed targets after completion. Earn-outs help when you and the seller disagree on value: the seller is sure the order book will hold, you aren't, so that portion of the price waits for the result. UK deal lawyers warn that badly drafted earn-outs often end in disputes (Nelsons Solicitors), because the seller's payout now depends on decisions you make as the new owner. If you use one, have your solicitor pin down the metric, the accounting basis and the payment dates, put a worked example in the agreement, and set out how a disagreement gets settled, such as referral to an independent accountant.
Seller finance. Deferred consideration and earn-outs both amount to the seller lending you part of the price. Expect them to ask what protects them if you don't pay. Typical answers are a charge over the business's assets, the seller keeping some shares for a period, or a personal guarantee from you (read the section on guarantees below before you offer one). Have your answer ready before the question comes.
Bank and asset-based debt. Lenders will advance term loans against the cash flow of established, profitable businesses, asset finance against vehicles and machinery, and invoice finance against what customers owe. Each pound of debt is a pound the seller doesn't have to defer. A common pattern uses lending secured on the target's own assets to fund part of the completion payment.
Your money, or an investor's. Lenders and sellers expect you to put some of your own cash in, because it shows commitment. Some buyers bring in investors instead and give up equity in return. Both work, as long as you're clear that "no money down" usually means someone else's money went down.
A worked example, with round numbers
This is an illustration, not a real deal. A business makes £300,000 a year in profit after paying a proper salary to whoever runs it. You agree a price of £900,000.
- £150,000 of your own money and a £150,000 bank loan secured on the business's assets make up £300,000 at completion.
- The remaining £600,000 is deferred: £200,000 a year for three years.
On paper, £300,000 of profit covers £200,000 of deferred payments with room to spare. Corporation tax changes that. At the 25% main rate, which applies to profits above £250,000 (gov.uk, Corporation Tax rates), £300,000 of profit leaves about £225,000. Repaying the £150,000 loan over three years at an assumed 7% interest costs about £57,000 a year. Your commitments come to roughly £257,000 a year against £225,000 of cash, so on these numbers you're short in year one before anything has gone wrong.
Stretch the deferral to five years at £120,000 a year and the commitments fall to about £177,000, leaving around £48,000 of headroom for a bad quarter. Your accountant will refine every figure here (when the tax falls due, the loan's real terms, the working capital the business needs), but the habit matters more than the precision. Run any structure through tax and debt repayments before you agree it.
Shares or assets
In a share purchase you buy the company itself: its bank account, contracts and history, including liabilities nobody has found yet. The warranties and indemnities in the purchase agreement are there to deal with those. In an asset purchase you buy the trade and assets into your own company, often a new one, and the old company stays with the seller. Buy out of administration and you should expect an asset purchase. Owners of healthy businesses tend to prefer selling shares, and you can trade on that preference in the negotiation. The tax treatment differs for both sides, enough to change what a fair price looks like, so take advice before the heads of terms fix the route.
Buyers commonly acquire through a limited company set up for the purpose. It keeps the deal's risk inside the company, gives lenders and investors a familiar entity to deal with, and separates the acquisition's finances from your own.
The risks the courses undersell
All of this depends on the business making money after you take over. Deferred payments fall due in a bad year as well as a good one: lose the biggest customer or a key manager and the instalment is still owed. Test the structure against a mediocre year, using your own numbers rather than the seller's forecast.
Personal guarantees need their own warning. Lenders, landlords and sometimes sellers will ask you to guarantee the company's obligations personally, which puts your house back behind a risk you set up a company to contain. A capped guarantee is sometimes the price of a good deal. Never sign one by reflex. Negotiate a cap, a time limit and release when you hit agreed milestones, and take independent advice first.
Deferral can also disguise overpayment. A £1.2m price for a business worth £900,000 feels manageable spread across four years, and you've still paid £300,000 too much.
What this means for sourcing
These structures suit a particular kind of business: established, profitable year after year, carrying little debt, and owned by someone who cares about what happens next as much as the headline price. Succession signals bring those owners to the surface, and the register shows a company's borrowing before you make contact. A company with no outstanding charges hasn't pledged its assets to anyone, which leaves room for the secured lending and seller security a structure needs.
In our June 2026 run on property companies around Newark, 13 of the 26 succession-flagged companies (a sole director aged 60 or over) had no outstanding charge on the register, and nine had never registered one. Property companies borrow against their buildings as a matter of course, so the picture will differ in trade sectors.
For where these structures sit in the wider sequence, from first letter through heads of terms, diligence and completion, see how the buying process runs.
In practice the harder job is finding a business whose numbers and owner both fit a structure like this. That search starts with sourcing off-market.
ProspectMap screens the Companies House register for your sector and area, and flags succession risk, outstanding charges and lender names on every company.
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