Buying a competitor: a UK buyer's guide

Buying a competitor is often the acquisition owners think about first. You know the market, you know the business, and you may know the owner. When they start talking about retirement, the opportunity can feel obvious.

It is also the deal type where the most can go wrong in ways a buyer does not expect. You are dealing with someone who may still be competing with you if talks fail, information that could hurt either side if mishandled, and customers and staff who chose the other business for a reason. This guide covers the questions to answer before you approach or make an offer.

This guide explains general principles. It is not legal advice. Competition law questions on any specific deal should be reviewed by a qualified competition lawyer.

Why buy this competitor?

"Because they are available" is not a reason. Test the deal against what your business actually needs:

• Customers. Would you gain customers you can't win today, or mainly ones you already compete for?
• Geography. Does it extend your reach into a region, or add density where you are already strong?
• Capacity. Does it bring people, premises, equipment or licences you need?
• Capability. Does it do something you don't, such as a service line, accreditation or technical skill?

If the main benefit is removing a rival, be careful. That reason alone rarely justifies the price, and it is also the kind of rationale that attracts competition scrutiny. Our guide to growth through acquisition covers how to test whether buying beats building.

How do you approach a competitor safely?

The approach is delicate because the owner is also a rival. Three principles help.

Ask for a conversation, not information. The first contact should be about whether the owner is open to talking, nothing more. Many buyers use an adviser so the first approach is discreet and the owner can decline without it affecting your relationship in the market. See how to approach a business owner.

Sign a confidentiality agreement early. Before anything commercially meaningful is discussed, both sides should sign one, drafted by your lawyer, covering what can be shared, who can see it and what happens if talks end.

Release sensitive information in stages. Competitors must not share competitively sensitive information (current and future prices, margins on specific customers, bid strategies, plans) in a way that could affect how they compete. The CMA's guidance on horizontal agreements, which applies the Competition Act 1998 to agreements between competitors, has a dedicated part on information exchange (CMA, 2023). In practice, lawyers often:

• share aggregated or anonymised data first, such as customer revenue by band rather than by name;
• hold back the most sensitive detail until later in the process, after price and main terms are agreed in writing;
• restrict access to a small group or to outside advisers who are not involved in day-to-day pricing or sales (sometimes called a "clean team").

Do not ask for customer-level pricing at the first meeting, however friendly it is. If the deal does not happen, you are still competitors.

Could competition rules affect the deal?

Most acquisitions of competitors in the UK raise no competition issues at all. But you should know the basics and get specialist advice on your own facts.

The CMA can review a merger if it meets one of its jurisdictional tests. Under its current quick guide, revised in January 2025 for the Digital Markets, Competition and Consumers Act 2024 (CMA, 2025):

Notification to the CMA is generally voluntary, except for certain firms designated under the digital markets regime. The CMA can still look at deals that were not notified. It has four months from the later of completion or the deal being made public to decide whether to open an in-depth investigation, and it can impose interim measures that stop the businesses being integrated while it reviews.

Three cautions:

1. Turnover alone does not settle it. The share of supply test is not the same as market share, and the goods or services can be described narrowly. A business with a strong position in a local area or a niche could be caught.
2. Information sharing rules apply whatever the size of the deal. They are separate from the merger thresholds.
3. Thresholds change. Always check the current CMA guidance on jurisdiction and procedure and ask a competition lawyer to review your position.

Will you keep the customers and the people?

This is where most of the value in a competitor deal lives or dies.

Customer overlap. List the customers you already share. Revenue from a shared customer is not additional; you may even lose some if the customer wanted two suppliers. Some customers chose the seller precisely because they did not want you.

Dependency on the owner. How many relationships sit with the owner personally? If they are leaving, you need a handover plan and possibly part of the price paid later, tied to customers being retained.

Staff. Overlapping roles create uncertainty. Key people may be approached by other competitors the moment the deal is public. As Andrew Clough of The Brew put it, "With many businesses, the people are everything" (Management Today, 2017). Identify who matters most, and how and when you will talk to them.

Integration. Decide before completion what changes and what does not: brand, pricing, systems, sites. PwC found that 79% of acquisitions where significant value was lost had no integration strategy at signing (PwC, 2019). Our post-acquisition integration guide covers how to bring the two businesses together without losing people or customers.

How should you value a competitor?

Start from the real profit of the target business on its own, once the owner's salary and one-off items are adjusted. See what a business is worth.

Then be disciplined about the benefits of combining. Cost savings from shared premises or overlapping roles are often real, but take time and cost money to achieve. Extra revenue from cross-selling is harder. McKinsey found that almost 70% of mergers failed to achieve the revenue benefits expected, and in about a quarter of cases cost savings were overestimated by at least 25% (McKinsey, 2004). If you pay the seller for benefits that depend on your business, you are paying twice.

Your checks should go deeper than usual on customer contracts, pricing and staff terms. The acquisition due diligence checklist sets out what to look at.

An illustrative example

This example is illustrative and fictional. A £30m fire and security business in Scotland learns that a smaller rival's owner is planning to retire. The buyer lists the rival's top 40 customers by sector and size band, without names, and finds about a quarter already use both businesses. It prices the deal on the remaining customers, holds back part of the price for 18 months tied to retention, and agrees with its lawyer which information can be exchanged at each stage. A competition lawyer confirms the deal falls outside the CMA's tests on the agreed facts.

Questions to answer before you approach

• What specific gap does this business fill?
• What will we pay at most, and when will we walk away?
• Which customers and staff do we already share, and which might leave?
• What information do we need, and at what stage?
• Have we taken competition law advice on our specific facts?
• Who will lead integration, and what changes on day one?

Finding the right competitor to approach

If you want to approach competitors in confidence, Acquisitiv Target 45 researches businesses that fit your criteria, agrees the list with you and approaches the owners discreetly, introducing you to owners open to a confidential conversation. It does not promise a completed deal, and you decide which conversations to take further.