Acquiring an existing business in Lagos can be a faster path to market than building from scratch. You inherit an established customer base, operational infrastructure, staff, and sometimes a recognized brand. But buying a business in Nigeria requires careful navigation of regulatory approvals, sector-specific ownership rules, and a due diligence process that goes well beyond what buyers expect in more mature markets. This guide covers everything you need to know to buy a business in Lagos with confidence.
Why Acquire Instead of Build?
The Nigerian M&A market has grown considerably over the past decade. According to data from Stanbic IBTC and Renaissance Capital, deal activity in sub-Saharan Africa consistently places Nigeria among the top three markets by volume, driven by consolidation in banking, telecoms, FMCG, and technology. For buyers, acquisition offers immediate revenue, proven unit economics, and an existing license or regulatory approval that can take years to obtain independently. For Lagos specifically, the combination of compressed deal multiples relative to Western markets and strong underlying consumer demand makes acquisitions genuinely attractive.
Platforms like BizBuySell occasionally list Nigerian businesses, and while the depth of listings does not yet match North American markets, it is a useful starting point for orientation on what types of businesses are available globally and how to frame your search criteria before engaging local brokers and advisors in Lagos.
Finding Businesses for Sale in Lagos
Most Lagos business acquisitions are sourced off-market through professional networks. Investment banks like Stanbic IBTC and Renaissance Capital handle mid-market and large transactions. Advisory firms like KPMG Nigeria, PwC Nigeria, and Deloitte Nigeria have active M&A practices that work on smaller deals as well. Business brokers and local accountants are often the first to hear when an owner is considering a sale, particularly for SMEs in the NGN 50 million to NGN 500 million range.
Industry associations and the Lagos Chamber of Commerce are also useful channels. Owners within the same industry often know who is thinking about exiting, and introductions through the LCCI or sector-specific trade associations can open doors that cold outreach cannot.
SEC Nigeria Approval Thresholds
Mergers and acquisitions above certain thresholds in Nigeria require approval from the Securities and Exchange Commission (SEC Nigeria) under the Investments and Securities Act (ISA). The current notification threshold is any transaction where the combined assets or turnover of the merging parties exceeds NGN 500 million. Transactions above this threshold require a formal merger filing with SEC, which includes submission of the merger scheme, financials of both parties, and a fairness opinion.
The SEC review process typically takes 30 to 60 days, though complex transactions or those involving regulated industries can take longer. Buyers should factor regulatory approval timelines into their deal structuring and LOI negotiations from the outset.
Conducting Due Diligence in Lagos
Due diligence in Nigeria covers three primary dimensions: legal, financial, and regulatory. Cutting corners on any of these creates serious post-acquisition risk.
Legal due diligence involves verifying CAC registration and shareholding structure, reviewing the company’s statutory books, checking for pending litigation, confirming land title and lease agreements, and examining key contracts with customers, suppliers, and employees. Nigeria’s land tenure system (governed by the Land Use Act) requires special attention for businesses that own or occupy property, as land rights can be more complex than buyers expect.
Financial due diligence in Nigeria must account for the prevalence of informal transactions, potential underdeclaration of revenue for tax purposes, and the reliability of management accounts versus audited financials. Engaging a Big Four or reputable mid-tier Nigerian firm to conduct financial due diligence is strongly recommended. Check FIRS tax clearance certificates to confirm the business is current on all tax obligations. Our overview of tax and financial services in Lagos can help you understand what clean books should look like.
Regulatory due diligence means verifying all sector-specific licenses are valid, confirming no regulatory sanctions are pending, and checking compliance with NSITF, ITF, pension (PenCom), and NAFDAC or SON requirements if applicable. Any gaps here become your liability post-closing.
NIPC Registration for Foreign Buyers
If you are a foreign national or foreign-owned entity acquiring a Nigerian business, you must register with the Nigerian Investment Promotion Commission (NIPC) either before or immediately following completion. NIPC registration is a legal requirement for foreign investors operating in Nigeria and provides access to repatriation guarantees under the Foreign Exchange (Monitoring and Miscellaneous Provisions) Act. Without it, repatriating dividends or sale proceeds can become legally complicated.
Share Acquisition vs Asset Acquisition
The choice between buying shares and buying assets has significant legal and tax implications in Nigeria. A share acquisition means you purchase the existing company in its entirety, including all liabilities, contingent obligations, and tax exposures. It is simpler from a transfer perspective (no re-registration of contracts and licenses) but exposes you to historical risk. A share acquisition may also trigger SEC notification requirements and stamp duty of 0.75% on the value of the shares transferred.
An asset acquisition allows you to cherry-pick specific assets and liabilities, leaving unwanted obligations behind. It is generally preferred when due diligence reveals material contingent liabilities or complex historical tax issues. However, asset acquisitions require individual transfer of contracts, licenses, and property rights, which can be operationally intensive in Nigeria where some licenses are non-transferable.
Sector Restrictions to Know Before You Buy
Nigeria restricts foreign participation in certain sectors. In oil and gas, the Nigerian Content Development and Monitoring Board (NCDMB) enforces local content requirements that affect foreign ownership and staffing levels. In telecommunications, the Nigerian Communications Commission (NCC) governs license transfers and foreign equity. In banking and financial services, the Central Bank of Nigeria (CBN) must approve any acquisition of a significant stake in a licensed bank or fintech. In broadcasting, NBC regulations limit foreign ownership to 20%.
These restrictions do not prevent foreign investment but add regulatory layers that require specialist legal counsel. Engaging a Lagos-based commercial law firm with M&A experience is essential for any cross-border deal. Our directory of business lawyers in Lagos is a good starting point for identifying qualified firms.
FIRS Tax Clearance and Closing
Any transfer of shares or business assets in Nigeria should be accompanied by a valid FIRS Tax Clearance Certificate (TCC) for the target company, covering the three most recent tax years. A clean TCC confirms the business has no outstanding federal tax liabilities. State-level tax clearance from the Lagos State Internal Revenue Service (LIRS) may also be required, particularly for employee-related taxes.
At closing, stamp duty on the share transfer is assessed at 0.75% of the transfer value and must be paid to FIRS within 30 days of execution. Update the CAC register of members and file the relevant forms to record the change of shareholding. A properly closed acquisition in Nigeria will have updated CAC records, a new allotment filing, and a revised statutory register within 30 days of completion.
Ready to Acquire in Lagos?
Buying a business in Lagos is one of the highest-leverage moves available to a serious investor in West Africa. The combination of population scale, growing consumer demand, and compressed valuations relative to developed markets creates real opportunity. But success depends on rigorous preparation, qualified local advisors, and a clear-eyed view of Nigeria’s regulatory environment.
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