Glossary of Legionella, Fire Safety and Sale Terms

About this glossary

A plain-English reference to the compliance standards, certification schemes and business sale terms that come up when an owner of a UK water hygiene, water treatment or fire safety business thinks about selling.

Compliance and standards

ACoP L8: The HSE's Approved Code of Practice, Legionnaires' disease: The control of legionella bacteria in water systems. It sets out how duty holders should comply with the law on Legionella control.
HSG274: The HSE's technical guidance on Legionella control, in three parts: evaporative cooling systems (Part 1), hot and cold water systems (Part 2) and other risk systems (Part 3).
BS 8580-1: The British Standard code of practice for Legionella risk assessments.
BS 7592: The British Standard for sampling water systems for Legionella bacteria.
BS 8552: The British Standard for sampling and monitoring water from building services closed systems, such as heating and chilled water.
BSRIA BG 50: BSRIA's guidance on water treatment for closed heating and cooling systems.
Written scheme of control: The plan, required under ACoP L8, setting out how the Legionella risks identified in a risk assessment will be controlled and monitored.
TMV: Thermostatic mixing valve: a valve that blends hot and cold water to a safe temperature, which needs regular servicing.
LCA: The Legionella Control Association: a voluntary, not-for-profit body whose members provide Legionella control services and products, follow its Code of Conduct and are audited annually.
Fire Safety Order: The Regulatory Reform (Fire Safety) Order 2005. It requires the responsible person for business premises to carry out a fire risk assessment and maintain fire safety measures. It applies in England and Wales; Scotland and Northern Ireland have their own rules.
Responsible person: Under the Fire Safety Order, the person with control of business premises, such as the employer, owner or managing agent, who is responsible for fire safety.
Building Safety Act 2022: The law that created the Building Safety Regulator and a stricter regime for higher-risk residential buildings in England.
BS 5839-1: The British Standard code of practice for fire detection and fire alarm systems in non-domestic premises.
BS 5266-1: The British Standard code of practice for emergency lighting.
BS 5306-3: The British Standard for the commissioning and maintenance of portable fire extinguishers.
BAFE: The body that runs fire safety registration schemes, including SP203-1 (fire detection and alarms), SP203-4 (emergency lighting), SP101 (extinguishers) and SP205 (fire risk assessment). Registration follows certification by a UKAS-accredited certification body.
FIRAS: A third-party certification scheme run by Warringtonfire for companies that install and maintain passive and active fire protection systems.
NSI: The National Security Inspectorate, a UKAS-accredited certification body for security and fire safety companies.
UKAS: The United Kingdom Accreditation Service, which accredits certification bodies.
ARC: Alarm receiving centre: a monitoring centre that receives signals from fire and security alarms.

Selling a business

Heads of terms: A short document setting out the main agreed terms of a sale, such as price and structure, before due diligence begins. It is usually not legally binding, apart from clauses such as confidentiality.
NDA: Non-disclosure agreement, also called a confidentiality agreement. Signed before a seller shares figures or sensitive information.
Due diligence: The buyer's checks on a business before completion, covering finances, contracts, employment, accreditations and legal matters.
SPA: Share purchase agreement: the main legal contract in a share sale.
Warranties: Statements about the business in the sale agreement. If one proves untrue, the buyer may be able to claim against the seller.
Disclosure letter: A letter from the seller setting out exceptions to the warranties, which limits what the buyer can claim for.
Completion: The point at which the sale legally takes effect and ownership passes to the buyer.
EBITDA: Earnings before interest, tax, depreciation and amortisation: a common measure of profit used in valuations. "Adjusted" EBITDA removes one-off and owner-specific costs.
Cash-free, debt-free: A basis for pricing where the buyer pays for the business without its cash or debt, and the price is adjusted for both at completion.
Working capital: The money tied up in running the business day to day, mainly what customers owe less what the business owes suppliers.
Deferred consideration: Part of the price paid after completion, in fixed amounts on set dates.
Earn-out: Part of the price that depends on the business meeting agreed targets after the sale.
Retention or escrow: Part of the price held back for a period against possible claims under the sale agreement.
Share sale: A sale of the shares of the company that owns the business. The company carries on with its staff, contracts and certificates.
Asset sale: A sale by the company of its business and selected assets to the buyer's company.
TUPE: The Transfer of Undertakings (Protection of Employment) Regulations, which protect employees' terms when a business moves to a new employer.
Change of control clause: A term in a contract that lets the other party end or renegotiate it if the ownership of the company changes.
Management buyout (MBO): A sale of a business to its existing managers.
Business Asset Disposal Relief: A relief that reduces Capital Gains Tax on qualifying business disposals. GOV.UK sets the rate at 18% for disposals from 6 April 2026. The Budget on 28 October 2026 announced that the lifetime limit will fall from £1 million to £500,000 for disposals on or after 6 April 2027, subject to legislation.

Questions owners ask

What is the difference between ACoP L8 and HSG274?

ACoP L8 is the HSE's Approved Code of Practice on controlling Legionella. HSG274 is the HSE's more detailed technical guidance, in three parts covering cooling systems, hot and cold water systems and other risk systems.

What is the difference between BAFE and a certification body?

BAFE runs the registration schemes. UKAS-accredited certification bodies, such as NSI, SSAIB, NICEIC and BSI, carry out the audits and issue the certification that BAFE registration depends on.

Sanjeev Desour is the founder of Richmonds, which buys UK water hygiene, water treatment and fire safety businesses from owners who want to retire. He founded IGNITE Academy in 2014 and runs the IGNITE Group of companies. LinkedIn

Sources

This guide is general information, not legal, tax or financial advice, and it is not an offer to buy any business. It reflects the rules and announcements known on the "last reviewed" date above. Tax rules and rates change, and announced changes may be altered before they become law, so take advice from your own accountant and solicitor before you act. Richmonds accepts no liability for decisions made on the basis of this guide. See our website terms.

Glossary: Legionella, fire safety and business sale terms