"Business sale fraud, fake listings and time-wasting enquiries can be reduced by checking identity, authority, company records, proof of funds, adviser involvement and red flags before sharing sensitive information or paying money."
Quick Answer
To verify a buyer or seller in a UK business sale, use a staged process. For sellers, check identity, ownership, authority to sell, company records, director or shareholder details, lease or asset ownership and whether any broker is properly authorised. For buyers, check identity, seriousness, source of funds, finance plan, proof of funds, adviser involvement and whether they understand the sector and transaction.
For limited companies, Companies House is a key starting point. Companies House identity verification became a legal requirement from 18 November 2025, with a 12-month transition period for existing directors and people with significant control.
Verification does not remove all risk. It helps you decide whether to continue, pause, ask for more evidence or walk away.
Contents
1. Why Verification Matters {#why-verification-matters}
A business sale involves significant amounts of money, sensitive information and considerable time on both sides. Without basic verification of who you are dealing with, both buyers and sellers are exposed to risks that are entirely avoidable.
For sellers, the risks of failing to verify a buyer include:
Sharing detailed financial records, customer lists, supplier contracts and operational information with someone who turns out to be a competitor, a time-waster with no realistic funding, or someone who intends to misuse what they learn. A buyer who cannot fund the deal will waste weeks or months of the seller's time and may cause the seller to lose other genuine opportunities. A dishonest buyer who extracts commercially sensitive information and then walks away has caused real harm, regardless of whether there is an NDA in place.
For buyers, the risks of failing to verify a seller include:
Pursuing a business that does not exist as described, or where the seller does not have authority to sell. Paying a deposit or progressing expensive due diligence work on a listing that is fraudulent or does not hold up to scrutiny. Discovering after heads of terms that the business is not owned solely by the person you have been dealing with, that a key asset is not included in the sale, or that the business has regulatory or legal issues that were not disclosed.
For both sides, failing to verify basic facts before sharing sensitive information or paying money is the most common source of avoidable problems in business sale transactions.
Verification is not a single step — it is a process that continues throughout the transaction. The level of verification required increases as the transaction progresses.
2. How to Check a Seller {#how-to-check-a-seller}
Before investing significant time or money in a business opportunity, a buyer should establish basic facts about the seller and the business. This does not require expensive investigations — most of the relevant information is either publicly available or can be requested from the seller as a reasonable condition of proceeding.
Key questions to ask a seller at the outset:
Who owns the business, and in what legal form — sole trader, partnership, limited company, LLP? If it is a limited company, what is the company registration number? Is the person you are speaking with the sole owner, a director, a shareholder or a broker? Do all owners agree to the sale? Is there a shareholders' agreement or partnership agreement that affects the sale? What exactly is being sold — shares or assets? What is included in the sale price — stock, equipment, goodwill, the lease, the brand, the customer list?
What to verify from publicly available sources:
If the business is a limited company, check it on Companies House (find-and-update.company-information.service.gov.uk). Verify that the company exists, is active, that the filing history is consistent with the claimed trading history, and that the directors and persons of significant control match who you are dealing with. Look for any registered charges (secured loans over company assets) and any insolvency notices.
If the business is sole trader or partnership, these are not registered on Companies House. Ask for evidence of trading — utility bills, business rates notices, HMRC correspondence, bank statements (with personal details redacted) — to confirm the business exists and is operating.
Seller evidence that may be appropriate to request:
Confirmation of company or business registration details, a brief asset list and ownership evidence (V5 documents for vehicles, equipment purchase records), a lease summary or the lease itself, an accounts summary for the most recent trading year, website and domain ownership confirmation, and the contact details of the seller's solicitor or accountant.
At early stages, do not request excessive personal data. Proportionality matters — asking for a copy of the seller's passport before you have had a single substantive conversation is unreasonable and likely to put a genuine seller off. Save formal identity verification requests for a later, serious stage.
Seller authority to sell:
Where a business is held in a limited company, check that the director(s) you are dealing with have authority to agree a sale. For most small companies, the directors have authority to approve an asset sale, but a share sale may require shareholder approval. Ask to see confirmation of the ownership structure and, for significant transactions, ask your solicitor to confirm the authority position before you proceed.
Where a broker is acting, see the section below on checking broker authority.
3. How to Check a Buyer {#how-to-check-a-buyer}
A seller should screen buyers before sharing detailed financial or commercially sensitive information. Not every enquiry comes from a genuine buyer with a realistic funding position. Some enquiries come from competitors, from individuals with no means to fund an acquisition, or from people whose interest is casual rather than serious.
Basic buyer screening protects the seller's time and information. A serious buyer should expect to be screened and should understand why it is necessary.
Key questions to ask a buyer:
Who are you, and what is your background? Are you buying personally or through a company? What draws you to this business or sector? Have you bought a business before, or is this your first acquisition? How are you planning to fund the purchase — personal savings, a bank loan, investor backing, a combination? Have you spoken to a lender or finance broker yet? What is your realistic timeframe? Do you have a solicitor or accountant advising you on this acquisition?
Why these questions matter:
A buyer who cannot explain their interest in the business, cannot describe their funding position at even a basic level, or who is unwilling to provide any information about themselves is not a buyer you should spend significant time on. A buyer who is clearly motivated, has a plausible reason for wanting the business, and has at least an outline funding position in place is worth engaging with seriously.
Buyer evidence that may be appropriate to request:
At initial screening stage: a brief introduction to the buyer and their background, confirmation of whether they are buying personally or through a company. After initial screening and NDA signature: an outline of their funding position and the name of their solicitor or accountant. Before sharing detailed due diligence documents or agreeing heads of terms: proof of funds or a lender's decision in principle.
What constitutes adequate proof of funds:
A bank statement showing available funds — with personal details such as sort codes and account numbers redacted — is one form of evidence. A letter from a solicitor or accountant confirming that they have sight of funds, without disclosing specific details, is another. For buyers using external finance, a decision in principle from a lender indicates that at least a preliminary funding assessment has been done. A funding plan supported by an adviser letter is appropriate for buyers combining personal funds and borrowing.
Do not ask buyers to send unredacted bank statements by email at an early stage. Use a secure channel and request only what is proportionate to where you are in the process.
4. How to Check a Broker or Representative {#how-to-check-a-broker-or-representative}
Many businesses are sold through a broker or business transfer agent. Where a third party is involved in the sale, buyers should verify both the broker's existence and their authority to act on behalf of the seller.
Questions to ask a broker:
Who is the seller, and can you confirm they are aware of and have authorised this listing? Do you have a signed instruction from the seller? What exactly have you been authorised to do — to market the business, to negotiate offers, to sign heads of terms? Who will provide documents during due diligence — you or the seller directly? Who signs the heads of terms and the sale agreement? What are your fees, and who pays them?
Verifying a broker:
Check whether the broker is a registered company. Look them up on Companies House. Check their website, their registration details and whether they appear to be an established, trading business. A legitimate broker should be able to provide a company number, a business address and details of their professional background without hesitation.
Note that business transfer agents in the UK are not currently regulated by the FCA in the same way that mortgage brokers or investment advisers are. This means there is no central register to check. However, membership of trade bodies — such as the Institute of Business Consulting or the Association of Business Transfer Agents — may be an indicator of professionalism, though membership of these bodies does not guarantee quality.
Red flags from brokers:
A broker who cannot or will not confirm the seller's identity or their authority to act should be treated with significant caution. A legitimate broker will always be able to provide seller confirmation. Similarly, a broker who pressures for upfront fees from a buyer before any due diligence has taken place, or who discourages direct contact with the seller, warrants careful scrutiny.
If you have serious doubts about whether a broker is legitimate, ask to speak directly with the seller before proceeding. A genuine seller will typically be happy to confirm the broker's authority.
5. Companies House Checks in Detail {#companies-house-checks}
For businesses operated through a limited company, Companies House is the most important starting point for independent verification. The register is free to search at find-and-update.company-information.service.gov.uk.
What to check:
Company name and number.Confirm the company name matches what you have been told. Check the company number. Be alert to similar-sounding company names — "Acme Trading Ltd" and "Acme Trade Ltd" are different companies.
Incorporation date and trading history.A company that was incorporated six months ago but is claiming a 10-year trading history should prompt questions. Check whether there is a legitimate explanation — a recent restructuring or incorporation of a previously sole-trader business, for example.
Registered office address.The registered office is not necessarily where the business trades, but it should be a real address. A registered office care of an accountant or company secretarial firm is normal. An address that does not appear to exist is a red flag.
Directors and people with significant control (PSCs).Check who is currently listed as a director and who holds significant control. Compare this to who you are dealing with. If the person claiming to be the sole owner is not listed as a director or PSC, ask for an explanation.
Filing history.Check whether the company has been filing accounts and confirmation statements on time. A pattern of late filings or overdue accounts may indicate disorganisation or financial difficulty. Gaps in the filing history should be explained.
Accounts.Filed accounts show the financial history of the company. For micro-entity accounts, the information is limited, but for small or medium-sized companies, more detail is available. Note that filed accounts are typically 12 to 18 months out of date — always request current management accounts in addition.
Registered charges.Charges registered at Companies House indicate that assets of the company are secured against a loan or finance arrangement. This matters for buyers because a charge holder — typically a bank — may have priority rights over certain assets. Your solicitor should check and address all registered charges before completion.
Insolvency notices.Companies House shows if a company is in administration, liquidation or has a county court judgment recorded. Buying a business from an administrator is possible but requires specialist advice.
Name changes.Companies can change their names. A company with multiple previous names — particularly if those names are associated with different business activities — is worth investigating further.
Companies House identity verification (from November 2025):
Companies House identity verification became a legal requirement from 18 November 2025, with a 12-month transition period for existing directors and persons of significant control. This means that, over time, directors and PSCs listed at Companies House will have had their identity verified by the registrar. This increases the reliability of the register as a verification tool, although the transition period means it will take time before all existing entries are verified.
What Companies House checks cannot tell you:
A clean Companies House record does not mean the business is profitable, well-run or worth the asking price. It does not confirm that the assets listed in the sale are actually owned by the company. It does not confirm that all financial representations are accurate. It does not reveal disputes, regulatory investigations or off-balance-sheet obligations. Companies House is a starting point, not a substitute for proper due diligence.
6. Proof of Funds and Finance Checks {#proof-of-funds-and-finance-checks}
One of the most common time-wasters in business sales is a buyer who expresses strong interest, receives detailed financial information, and then disappears — or reveals that they cannot fund the acquisition. Requesting proof of funds at an appropriate stage protects the seller's time.
When to request proof of funds:
Not at the first enquiry — that would be disproportionate and off-putting. A reasonable point to request evidence of funding is before sharing detailed management accounts, before granting data room access, and certainly before agreeing exclusivity or heads of terms.
What constitutes adequate proof:
There is no single document that proves a buyer can fund a purchase. The relevant evidence depends on how the buyer intends to fund the deal.
For a cash buyer: a redacted bank statement or a letter from a solicitor or accountant confirming they have sight of funds at least equivalent to the purchase price, plus an allowance for professional fees and working capital.
For a buyer using a commercial mortgage or business acquisition loan: a decision in principle from a lender, indicating that preliminary credit assessment has been done.
For a buyer using investor funding: a letter from the investor or their solicitor confirming their commitment, or evidence that a funding structure is in place.
For a buyer combining personal funds and borrowing: a combination of the above, supported by a coherent funding plan.
Buyer financial questions worth asking:
Does the buyer have sufficient cash for a deposit, even if the balance is being financed? Do they have funds available for professional fees — solicitor, accountant, survey — which can amount to several percent of the purchase price for a small acquisition? Do they have working capital available after completion, or will they be stretching to complete the purchase and then have nothing left to operate the business? Have they factored in any stock or inventory purchase that may be over and above the headline business price?
A buyer who has not thought through any of these questions may not be ready to proceed, regardless of how interested they appear.
7. Scam and Red Flag Warning Signs {#scam-and-red-flag-warning-signs}
Business sale fraud does occur. Fake listings, fake buyers, identity fraud, deposit scams and phishing attacks targeting parties in transactions are all real risks. Knowing the warning signs reduces the likelihood of becoming a victim.
Warning signs in a listing or seller:
A price that appears significantly below market value for no obvious reason is the most common indicator of a fake listing. Listings with stock photography that appears elsewhere online, or with descriptions that match other businesses word-for-word, may have been copied from legitimate listings. A seller who cannot identify the business when pressed, or who provides inconsistent details about what is being sold, warrants caution.
A seller who requests a deposit or advance payment before any documents have been provided, or before a solicitor is involved, should be treated with the greatest caution. Legitimate sellers do not typically require upfront payment from buyers before due diligence begins.
Warning signs in a buyer:
A buyer who refuses to provide any information about themselves, who declines to sign an NDA, or who demands access to the full data room before any screening has taken place is not behaving like a serious acquirer. A buyer who claims to represent a large organisation but cannot provide any verifiable details of that organisation, or who is evasive about their funding when a direct question is asked, may not be genuine.
Warning signs during the process:
Pressure to move unusually quickly — "I need to sign today or I'll have to walk away" — is a tactic sometimes used to prevent parties from doing proper checks. If the communication style suddenly changes, the person you are dealing with seems to be a different person, or contact moves to a different email address or phone number, exercise caution.
Bank detail fraud — where payment instructions are intercepted and fraudulent bank details substituted — is a serious risk in property and business transactions. Always verify bank details by calling a known, independently verified number for your solicitor or the other party's solicitor before transferring any funds. Never rely on bank details sent by email alone, and be alert to any last-minute change of bank account.
If you suspect fraud:
Do not send money. Do not share sensitive information. Report suspicious listings to the platform. Suspected fraud can be reported to Action Fraud (actionfraud.police.uk) in England, Wales and Northern Ireland, and to Police Scotland in Scotland.
8. Staged Disclosure: What to Share and When {#staged-disclosure-what-to-share-and-when}
Verification and staged disclosure go hand in hand. The more sensitive the information, the higher the threshold of verification required before it is shared.
Stage 1 — Public listing:
Share a broad description of the business — sector, general location, approximate size, headline financial performance if the seller is comfortable doing so, asking price and a brief reason for sale. Do not share the business name, detailed financials, customer information, staff details, supplier terms or any information that would be commercially damaging if disclosed without the business being sold.
Stage 2 — Initial screened enquiry:
Once a buyer has been identified and has made contact, share a more detailed business summary or information memorandum — still without identifying the business by name if the seller prefers. This may include a summary of financial performance, the basics of the lease and premises, staff headcount, asset categories and a high-level trading overview. Introduce the NDA at this stage.
Stage 3 — NDA signed:
Once an NDA is in place, share more detailed financial information — filed accounts, management accounts summary, a working capital overview — along with anonymised staff information, a contract summary and an anonymised customer concentration overview. Do not share full customer lists, individual employee details or the most commercially sensitive contracts at this stage.
Stage 4 — Proof of funds confirmed, advisers in place:
Once the buyer has demonstrated financial credibility and appointed professional advisers, full data room access becomes appropriate. Share detailed management accounts, PAYE and VAT records, individual key contracts, full lease documentation, detailed employee information (appropriately handled under UK GDPR) and supplier terms.
Stage 5 — Heads of terms agreed:
At this stage, formal due diligence is underway with adviser oversight. Any remaining documents not yet shared — sector-specific compliance records, full dispute history, detailed IP documentation — are appropriate at this stage.
Operational access — last of all:
Passwords, administrator credentials, domain registrar access, CRM access and bank mandates transfer only at or after legal completion. Never share operational credentials during due diligence.
9. Verification Checklist {#verification-checklist}
Seller verification (buyer's checks on the seller):
Seller identity confirmed — name, address, role in the business
Seller authority to sell confirmed — sole owner, or authority from all owners
Company number checked on Companies House where applicable
Directors and persons of significant control reviewed
Filing history reviewed — accounts and confirmation statements up to date
Registered charges reviewed and understood
No insolvency notices found
Business existence verified — trading address, utility evidence, website
Lease and property position confirmed
Broker authority confirmed where a broker is involved
Adviser contact details confirmed
Buyer verification (seller's checks on the buyer):
Buyer identity confirmed — name, address, background
Buyer's acquisition rationale understood and plausible
Funding route understood — cash, loan, investor, combination
Proof of funds requested and reviewed at appropriate stage
Adviser details confirmed — solicitor and/or accountant instructed
NDA signed before sensitive information shared
Buyer's timetable understood and realistic
Buyer's understanding of due diligence process confirmed
Scam prevention (both parties):
No money transferred without independent verification of bank details
Bank detail changes verified by telephone on a known number
Sensitive information shared in stages, not all at once
Suspicious listings or behaviour reported to the platform
Pressure tactics recognised and resisted
Solicitor involved before any significant commitment made
10. FAQs {#faqs}
Is a Companies House search enough to verify a seller?
No. Companies House is a useful and important starting point for limited companies, but it is not a substitute for proper due diligence. A company can be active, have clean filings and still be misrepresented to a buyer. Use Companies House as one layer of verification alongside requesting documents, taking professional advice and conducting your own assessment of the information provided.
Should sellers ask buyers for proof of funds?
Yes, at an appropriate stage. Requesting proof of funds before detailed financial information is shared is a reasonable and proportionate step. A genuine buyer will understand why this is asked and should be willing to provide at least an outline of their funding position. The level of evidence requested should be proportionate to the stage — an outline at initial enquiry, more substantive evidence before detailed due diligence begins.
Should buyers pay deposits before due diligence?
Be very careful. A deposit before due diligence and heads of terms is unusual and potentially a red flag. If a deposit is requested at any stage, it should be paid only under clear written terms — ideally drafted by your solicitor — specifying what happens to the deposit if the deal does not proceed, and on what grounds it would be refundable. Deposits should be held by a solicitor in a client account, not paid directly to the seller or broker.
Can a broker agree a sale without the owner's authority?
No. A broker acts as the seller's agent and can only do what the seller has authorised them to do. An agreement entered into by a broker without proper authority may not be binding on the seller. If you have any doubt about whether a broker has authority to agree specific terms on the seller's behalf, ask the seller directly to confirm.
What if a listing looks fake?
Do not send money. Do not share sensitive information. Report the listing to the platform it appears on. Action Fraud (actionfraud.police.uk) is the national reporting centre for fraud and cybercrime in England, Wales and Northern Ireland.
How do I verify a business has the customers it claims?
This is done during formal due diligence, not at the initial screening stage. The seller should be able to provide a customer concentration analysis showing the percentage of revenue from the top customers (anonymised at first), references from key customers where appropriate, and contracts or evidence of ongoing relationships. If the seller cannot provide reasonable evidence of the customer base they are claiming, that is a material concern.
What is the difference between a decision in principle and proof of funds?
A decision in principle (DIP) from a lender indicates that the lender has assessed the buyer's creditworthiness at a preliminary level and is willing in principle to lend a specified amount, subject to full underwriting and a satisfactory business assessment. It is not a guarantee of funding but indicates that the buyer has begun the lending process. Proof of funds, for a cash buyer, means actual evidence that the money is available — typically a bank statement or solicitor's confirmation. For acquisitions funded partly by cash and partly by a loan, both elements of evidence are relevant.
Should I take legal advice before meeting a potential buyer or seller?
Taking legal advice before committing to anything significant is always sensible. You do not need a solicitor for an initial conversation or meeting. However, before signing any NDA or exclusivity agreement, before paying any deposit, and certainly before heads of terms are agreed, professional advice from a solicitor experienced in business sales is strongly recommended.
Key Takeaways
Verification is not a single check — it is a continuous process that runs throughout the business sale. The level of verification required increases as the transaction progresses and as the stakes become higher.
Both buyers and sellers benefit from a methodical approach. Buyers should verify that the seller has authority to sell, that the business exists as described, and that the financial information provided is consistent with publicly available records. Sellers should verify that buyers are who they say they are, that their funding position is realistic, and that they are engaging in good faith before sharing sensitive information.
Companies House provides useful public information for limited company checks. From November 2025, identity verification is a legal requirement for directors and persons of significant control, which over time will increase the reliability of the register.
Red flags — unusually low prices, pressure tactics, inability to confirm basic facts, sudden changes to bank details, requests for upfront payment — should prompt caution. Do not send money and do not share sensitive information until you are confident in who you are dealing with. Involve a solicitor before making any significant financial commitment.
Related Resources
Important Disclaimer
Buy a Business Ltd is a marketplace, not a broker, corporate finance adviser, M&A adviser, law firm, accountant, tax adviser, lender, valuation firm or investment adviser. Information, guides, templates, checklists and examples on this site are for general guidance only and do not constitute legal, tax, financial, investment, lending, valuation, employment, data protection, brokerage, corporate finance, M&A or regulated advice.
Tax, VAT, Companies House, data protection and business-sale rules can change and depend on your circumstances. You should seek independent professional advice — including from a solicitor and accountant — before buying, selling, valuing, financing, negotiating or completing a business purchase.
Sources and Useful References
Companies House / GOV.UK: Verify your identity for Companies House —gov.uk
Companies House: Get information about a company —find-and-update.company-information.service.gov.uk
GOV.UK: Avoid and report internet scams and phishing —gov.uk
Action Fraud: Report fraud and cybercrime —actionfraud.police.uk
ICO: Due diligence when sharing data following mergers and acquisitions —ico.org.uk