Buying or selling a business is one of the biggest transactions most owners will ever make. In Scotland, the deal is governed by Scots law, any property is transferred through the Scottish system and the paperwork looks a little different from what an English adviser might expect. This guide explains how a business sale or purchase works from first conversation to completion, what your solicitor does at each stage and the decisions that have the biggest effect on price, tax and risk.

In brief

There are two ways to buy a company’s business: buy its assets, or buy the shares of the company that owns them.
Most deals follow the same path: confidentiality, heads of terms, due diligence, the sale agreement, then completion.
Warranties, indemnities and the disclosure letter decide who carries the risk of problems found after the sale.
Employees usually transfer automatically under TUPE on an asset sale, on their existing terms.
A typical small or medium sized deal takes three to six months once heads of terms are agreed.

On this page

Asset purchase or share purchase?
The process step by step
Due diligence
The sale agreement
Price, payment and tax
Preparing to sell
Points specific to Scotland
Frequently asked questions

The first question in any deal is what is actually being bought. If the business is run by a sole trader or partnership, the buyer has to buy its assets. If it is run by a limited company, there is a choice.

	Asset purchase	Share purchase
What changes hands	Chosen assets such as goodwill, equipment, stock, contracts and premises	The shares in the company, which keeps everything it owns and owes
Liabilities	Buyer can usually leave unwanted liabilities with the seller	Company keeps its history, including unknown liabilities
Employees	Transfer to the buyer under TUPE	Stay employed by the same company
Contracts and leases	Usually need consent to transfer	Usually stay in place, subject to change of control clauses
Tax on the purchase	LBTT on any property, possibly VAT	Stamp duty of 0.5% on the share price

Simplified comparison. The right route depends on the business, the tax position of both sides and what due diligence uncovers.

Buyers often prefer an asset purchase because it lets them pick what they take on, while sellers often prefer a share sale because it is a clean exit and can be more tax efficient. Our article on asset sales and share sales looks at the trade-offs in more detail, and our share purchase solicitors can advise on the company route.

The process step by step

Confidentiality agreement. Before the seller shares accounts, customer details or contracts, the buyer signs a non-disclosure agreement.
Heads of terms. The parties record the main commercial points: price, structure, timetable, key conditions and any exclusivity period. Heads of terms are usually not binding, apart from confidentiality and exclusivity.
Due diligence. The buyer and its advisers investigate the business, usually through an online data room of documents and written questions.
Negotiating the documents. The buyer’s solicitor normally drafts the sale agreement, and the seller’s solicitor prepares the disclosure letter. Funding, property and employment documents are agreed at the same time.
Exchange and completion. In most smaller deals the agreement is signed and completed on the same day. Where approvals are needed first, such as a landlord’s consent or funding, there may be a gap between signing and completion.
After completion. Filings at Companies House, registration of any property and security, notifying customers and suppliers, and dealing with any completion accounts or deferred payments.

Due diligence

Due diligence is the buyer’s chance to find out what it is really buying before it is committed. Solicitors handle the legal side while accountants look at the numbers. The legal review usually covers:

ownership of the shares or assets, and any security held by lenders
key customer and supplier contracts, including change of control and termination rights
property titles and leases, including whether the landlord must consent to a transfer
employees, contracts of employment, pensions and any disputes
intellectual property, IT systems and data protection compliance
litigation, regulatory licences and insurance

What due diligence finds feeds directly into the price and the protections in the sale agreement. A problem discovered early can often be fixed or priced in. The same problem discovered after completion can only be dealt with through a warranty claim.

The sale agreement

The sale agreement, called an asset purchase agreement or a share purchase agreement, sets out exactly what is being sold, the price and how it is paid, and the conditions that must be met. Its most heavily negotiated parts are usually:

Warranties. Statements of fact about the business, such as the accounts being accurate or there being no litigation. If a warranty proves untrue and the buyer suffers a loss, the buyer can claim against the seller.
Disclosure letter. The seller’s chance to qualify the warranties by disclosing known issues. A matter that is fairly disclosed usually cannot found a warranty claim, so careful disclosure protects the seller.
Indemnities. Pound-for-pound protection for specific known risks, such as a tax issue or a threatened claim.
Limits on claims. Time limits, minimum claim amounts and an overall cap, often linked to the price.
Restrictive covenants. Promises by the seller not to compete with the business or poach staff and customers for a period after the sale.

Property, employment and funding documents sit alongside the main agreement. If premises are included, our commercial purchase and commercial lease teams deal with the title or the transfer of the lease.

Price, payment and tax

The headline price is only part of the deal. How and when it is paid can matter just as much:

Completion accounts adjust the price after completion to reflect the actual cash, debt and working capital on the day.
Locked box deals fix the price by reference to an earlier balance sheet, with protection against value leaving the business in the meantime.
Deferred consideration and earn-outs spread payment over time, sometimes depending on future performance. Sellers should ask for security for anything paid later.

Tax affects both sides. On a share sale, the buyer pays stamp duty at 0.5% and an individual seller may qualify for Business Asset Disposal Relief, which reduces Capital Gains Tax to 18% on qualifying gains from 6 April 2026, up to a lifetime limit. On an asset purchase that includes property, Land and Buildings Transaction Tax will usually be due, as explained in our guide to commercial property LBTT. Your solicitor will work with your accountant so the structure and the paperwork match the tax advice.

Preparing to sell

Sellers who prepare early get a better price and a faster, less stressful sale. Before going to market, it is worth:

tidying up the company’s records, statutory registers and filings at Companies House
making sure key contracts are in writing, current and transferable
checking ownership of intellectual property, websites and domain names
resolving shareholder issues, using the drag along and tag along rights in your Articles of Association or shareholders’ agreement
dealing with any disputes or regulatory issues before a buyer finds them

Our article on the key steps to prepare your business for sale goes into more detail. If the buyers are your own managers, read about how a management buyout works, and if the sale is part of a longer-term plan, our business succession planning team can help map out the timing.

Points specific to Scotland

Property. Heritable property is transferred by disposition and registered in the Land Register of Scotland, and any loan secured over it is a standard security.
Assignation. In Scotland, contracts and leases are transferred by assignation, and the other party often needs to be notified or to consent.
Execution. Documents signed in line with the Requirements of Writing (Scotland) Act 1995 can be self-proving, and electronic signatures are widely used.
National security. Buying a company that operates in a sensitive sector, such as defence, energy or data infrastructure, may need government clearance under the National Security and Investment Act 2021 before completion.

Frequently asked questions

How long does it take to buy or sell a business in Scotland?

Most small and medium sized deals take three to six months from agreeing heads of terms to completion. The main variables are how organised the seller’s records are, how much due diligence the buyer needs and whether third party consents, such as a landlord’s, are required.

Do the buyer and seller need separate solicitors?

Yes. The buyer and seller have opposing interests on price, warranties and risk, so each needs independent legal advice.

What happens to the employees when a business is sold?

On an asset sale, employees assigned to the business usually transfer to the buyer automatically under TUPE, on their existing terms and with their continuous service. On a share sale, they stay employed by the same company, so TUPE does not apply.

Can I buy a business that is in financial difficulty?

Yes, but the risks are different. Purchases from administrators or liquidators come with very limited warranties, so due diligence matters even more. Our insolvency team can advise on buying from an insolvency practitioner.

What is a disclosure letter?

A letter from the seller to the buyer that sets out exceptions to the warranties in the sale agreement. Anything fairly disclosed usually cannot be the subject of a warranty claim later, so it is one of the most important documents for a seller.