Buying a business abroad means committing a large sum in a foreign currency, so the exchange rate you secure can change the final price by tens of thousands of pounds. UK buyers can manage that risk with tools such as forward contracts, market orders and a dedicated specialist, rather than leaving the completion rate to chance.
A cross-border acquisition rarely settles in a single moment. There is usually a deposit, a completion payment and, often, deferred consideration or an earn-out months or years later. Each payment is exposed to currency movement, and the sums involved make even a small percentage swing material. This guide explains where that risk sits across a deal and how to plan for it.
How does currency affect buying a business abroad?
When you buy a business priced in euros, US dollars or another currency, the price is fixed in that currency but the cost to you in pounds moves with the exchange rate. Between agreeing heads of terms and completing, the rate can drift, and on a seven-figure deal a modest move translates into a large change in the sterling cost.
The direction of GBP/EUR and GBP/USD is driven largely by the interest-rate differential between the Bank of England and the relevant overseas central bank, alongside growth and political news. UK companies complete cross-border acquisitions regularly, and the outward flow is tracked by the Office for National Statistics in its quarterly mergers and acquisitions data. For an individual buyer, the practical point is simple: the rate is a live variable in the deal, and it is one of the few you can actively hedge.
How much can currency movement change the price of an overseas acquisition?
The maths is straightforward, and the numbers are larger than most buyers expect. Consider an illustrative acquisition of a eurozone business for €2,000,000, with a three-to-six-month gap between agreeing the price and completing.
- At an illustrative rate of 1.17, €2,000,000 costs about £1,709,400.
- If GBP/EUR slips to 1.13 by completion, the same €2,000,000 costs about £1,769,900.
- That is roughly £60,500 more for exactly the same business — simply because the rate moved.
The proportions are what matter, because they hold at any deal size: a 2% adverse move on a £1.7m purchase is around £34,000, and a 2% move on a £5m purchase is around £100,000. These are durable figures you can apply to your own numbers. A US acquisition works the same way — a $2,500,000 target at an illustrative 1.25 costs £2,000,000, but at 1.20 it costs about £2,083,300, some £83,300 more.
What currency tools can protect the purchase price of a business abroad?
Three tools cover most acquisition scenarios. Each suits a different stage of the deal, and they can be combined.
A forward contract is an agreement to buy a set amount of currency at a fixed rate for delivery on a future date. It lets you lock the rate when you agree the price, so the sterling cost of completion is known regardless of how the market moves. Forward contracts are commonly available for up to 12 months, which fits the typical timeline between exchange and completion, and can be drawn down in stages to match a deposit and a completion payment.
A market order is an instruction to buy currency automatically if the rate reaches a level you specify. A limit order targets a better rate than today’s; a stop-loss order protects against the rate falling below a floor you can still afford. Together, market orders and stop-loss orders let you set the boundaries of an acceptable outcome and let the market work within them.
A spot contract is an exchange at today’s rate for near-immediate settlement. It suits the final completion payment once the rate risk has already been managed, or a deal that moves from agreement to completion very quickly. Many buyers use a forward contract for UK businesses to fix the bulk of the exposure and a spot payment to settle any last-minute adjustment.
The common thread is certainty. Fixing a rate early lets you present a firm sterling budget to your board, your lender and your advisers, and it removes one significant variable from an already complex transaction. You can fix the exchange rate for a future payment as soon as the price is agreed.
Bank or specialist broker for a cross-border acquisition: which is better?
Both banks and specialist brokers can move seven-figure sums, but they differ on the margin built into the rate, the availability of forward contracts and the level of dedicated support. The table below sets out the typical trade-offs so you can weigh them for your own deal.
| Feature | High-street bank | Specialist currency broker | Money-transfer app |
|---|---|---|---|
| Typical margin on the rate | Often around 3–4% | Often 0.2–1% | Low headline margin, but limits often apply on very large sums |
| Forward contracts to lock a rate | Sometimes, usually for larger corporate clients | Yes, commonly up to 12 months | Generally not offered |
| Dedicated dealer by phone | Varies | Yes — a named specialist | Usually app-only support |
| Suited to a £1m+ acquisition | Yes | Yes, structured across stages | May hit transfer limits |
| Client-fund protection | FSCS deposit protection | Funds safeguarded via FCA-authorised e-money partners | Varies by provider |
The margin difference is the one buyers most often overlook. On a €2,000,000 purchase, the gap between a 3% rate margin and a 0.5% margin is around €50,000 — money that stays in the deal rather than in the spread. For more detail, see our comparison of a currency broker versus a bank and how exchange rates affect business profits.
What are the stages of paying for a business abroad, and where does currency risk sit?
Mapping currency risk to the deal timeline is the clearest way to plan. A typical acquisition has four payment points, each with its own exposure.
- Deposit or exclusivity payment. Often 5–10% of the price, paid when heads of terms are signed. The rate risk on the balance begins here, so this is the natural moment to fix a forward rate.
- Completion payment. The largest transfer, made when contracts complete. This is the payment most exposed to a rate move during due diligence.
- Deferred consideration or earn-out. Sums paid months or years later, often linked to performance. A longer-dated forward or a series of forwards can cover these future payments.
- Working-capital or completion-accounts adjustment. A smaller true-up after completion, usually settled at spot once the figure is confirmed.
Because the payments are staggered, a single forward contract drawn down in stages, or a small set of forwards, can match the sterling cost to the deal structure. If the acquired business will later send you profits or dividends, you can plan the return leg too — see repatriating overseas earnings and the ongoing job of paying overseas suppliers once you own the company.
What checks apply when transferring large sums to buy a business abroad?
Any regulated provider moving a large sum must carry out customer due diligence and confirm where the money came from. Under the Money Laundering, Terrorist Financing and Transfer of Funds Regulations 2017, expect source-of-funds and proof-of-funds checks — for example, evidence of sale proceeds, financing, or accumulated business profits — before a seven-figure payment is released.
Preparing this paperwork early prevents delays at completion, when timing is tight. Our guide to proof of funds for large international transfers sets out what is typically required, and the practical steps of sending a large sum abroad follow the same pattern at greater scale. The minimum transfer with Cambridge Currencies is £5,000, so acquisition-sized payments are well within scope.
Common currency mistakes when buying a business overseas
- Leaving the rate unhedged until completion. Agreeing a foreign-currency price and only buying the currency on completion day exposes the whole sum to months of market movement.
- Budgeting at today’s rate. Presenting a board or lender a sterling figure based on the current spot rate, with no allowance for movement, can leave a funding gap if the rate turns.
- Overlooking the deposit. The exclusivity or deposit payment is often made in a rush and at a bank’s default rate, quietly costing more than it needs to.
- Forgetting the earn-out. Deferred consideration is a real currency exposure that can sit unmanaged for years until the payment falls due.
- Ignoring the spread. A headline “no fee” transfer can carry a wide margin in the rate itself; the true cost is the total sterling paid, not the advertised fee.
How a specialist currency broker helps with an overseas acquisition
A specialist gives you a named dealer who understands deal timelines and can structure forwards, market orders and staged payments around exchange, completion and any earn-out. Cambridge Currencies, founded in 2023, completes every transaction by phone with a dedicated specialist — a deliberate approach for large, time-sensitive payments where speaking to a person adds real value.
Client funds are safeguarded through FCA-authorised payment partners, Currencycloud (FRN 900199) and ScioPay (FRN 927951), each of which you can verify on the FCA Financial Services Register. You can track the market with our currency converter and the live GBP/EUR rate, explore the full business foreign exchange service, or read the corridor detail for sending money to the USA if your target is American.
Frequently asked questions
Can I fix the exchange rate before I complete on a business abroad?
Yes. A forward contract lets you fix the rate when you agree the price and settle later, commonly up to 12 months ahead. This makes the sterling cost of completion known in advance, which helps with board approval and lender conditions.
How much deposit is usually needed to buy a business abroad?
Deposit or exclusivity payments commonly range from around 5% to 10% of the purchase price, though this varies by market and deal. Because it is the first foreign-currency payment, it is a sensible point to start managing the rate on the balance.
What documents do I need to transfer the money?
Expect identity verification and source-of-funds evidence under the Money Laundering Regulations 2017 — for example, sale proceeds, a loan agreement or business accounts. Preparing these before completion avoids last-minute delays when the payment must be released quickly.
Should I use my bank or a currency broker for the acquisition?
Both can move large sums. Banks may build a wider margin into the rate and offer less hands-on support, while a specialist broker typically offers a tighter margin, forward contracts and a named dealer. The right choice depends on the size, timeline and structure of your deal.
How do I manage the currency risk on an earn-out?
Deferred consideration and earn-outs are future foreign-currency payments, so they carry currency risk until settled. A longer-dated forward contract, or a series of forwards timed to each payment, can fix the sterling cost of those future amounts.
Does the exchange rate affect the price of the business itself?
The price is fixed in the seller’s currency, so the business does not become cheaper or dearer in that currency. What changes is the sterling amount you pay to buy that currency, which is why fixing the rate protects your effective purchase price.
Related guides
Planning a cross-border acquisition? Speak to a Cambridge Currencies specialist about fixing the rate across your deposit, completion and earn-out payments. Every transaction is handled by phone with a dedicated specialist who can structure the timing around your deal. Talk to a specialist about your acquisition.
