It's a gamble. There are ways of verifying business records to ensure that you're buying what the seller indicates. You should also do quite a bit of research on the company to see what kind of state the seller is leaving the company in. Using an escrow service and having an attorney draw up legal contracts will help ensure both parties remain safe. Client loyalty is a gamble though. Generally, during a change in ownership as long as the clients do not feel as if the business is turning south as a cause of the transfer in ownership they will not leave the company just because of a transfer in ownership. Clients that have developed personal relationships with their business professionals may want to keep those ties though.
A good research is the basis for your decision to buy and what offer to make based on your rationale to acquire a specific operation (not to say business, as most of them are not). Calculate to lose 10-30% of the clients. That doesn't mean it has in fact to be that way but you can use it to do further estimates. Communicate to the clients what will or will not change for them and most will be happy to stay on board when they see that you provide useful services. However, for those with 'dormant' accounts it will be a wake-up call and they will cancel, but that's something your DD can reveal beforehand.
Where acquisition is very good for your business and income, it may return opposite of what you expected. Maybe clients are constantly in-demand and you would need to buy additional servers or they don't like what you offer (location, price etc..). You should do some company research and always request NDA.
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Yes, get the paperwork done properly. How small is small? If it's worth it, get a professional involved that has expertise in merger/acquisition. Usually their commission is about 5% of the total sale.
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