Selling a business

Owners decide to sell for a variety of reasons, including:

• Retirement or semi-retirement.
• Pursuing new ventures.
• A strategic exit after achieving growth milestones.
• Responding to changes in the market or industry.

Whatever the reason, the sale needs to align with your personal and financial goals — the price only matters in the context of what you need it to fund afterwards.

Check what the proceeds need to fund

Our free retirement calculator shows whether the sale proceeds and your existing pensions will support the income you want — the question most exits are really about.

Get a professional valuation

A professional valuation is critical to understanding what your business is worth. Profitability, growth potential, the quality of the customer base and market conditions all feed into the figure.

Organise your financials

Make sure your accounts, tax records and financial statements are accurate and up to date. Transparency builds buyer confidence and materially shortens the sale process.

Address operational weaknesses

Buyers pay more for well-run businesses with fewer risks. Streamline operations, reduce dependency on key personnel — including yourself — and get customer contracts and supplier agreements in order.

Assemble your advisory team early

Engage a financial adviser, tax specialist and solicitor before you go to market. Most of the tax planning that saves money has to happen before a deal is agreed, not after.

1. Define your goals

Are you looking for a quick sale, or prioritising maximum value? Your answer shapes your approach and the buyers you target.

2. Identify potential buyers

Buyers typically fall into a few categories:

• Competitors looking to expand.
• Private equity firms or other investors.
• Employees or the management team, through a management buyout.
• An employee ownership trust, which can be highly tax-efficient for the seller.

3. Market the business

Work with a broker or adviser to create a prospectus that presents your strengths and the opportunity credibly, without overstating what due diligence will later test.

4. Negotiate terms

Evaluate offers on more than price — payment terms, warranties, deferred consideration and the buyer’s plans for the business all affect what you actually receive and when.

5. Survive due diligence

Buyers will examine your financial records, contracts and operations in detail. Preparation is what keeps this stage from causing delays or price chips.

6. Finalise the sale

Work with your legal and financial advisers to complete the agreement with every term clearly defined, particularly anything conditional on future performance.

Tax planning is central to how much of the sale proceeds you keep. The main considerations are:

• Business Asset Disposal Relief (BADR) — formerly Entrepreneurs’ Relief, this can reduce the Capital Gains Tax rate on qualifying gains, subject to a lifetime limit and strict qualifying conditions.
• Employee ownership trusts — a sale to an EOT can be free of Capital Gains Tax entirely where the conditions are met, which is why it is worth comparing against a trade sale.
• Inheritance tax — business assets may attract relief while you hold them that cash proceeds will not, so planning before the sale matters.
• Earn-out agreements — where part of the price depends on future performance, the tax treatment of the deferred element needs to be understood before you sign.

These reliefs turn on detail and on timing. A financial adviser working alongside your accountant can model the outcomes of each structure before the deal is fixed.

Once the sale completes you go from holding an illiquid business to holding a large cash balance — a different problem with its own risks. Consider:

• Investing the proceeds — build a diversified portfolio aligned with your risk tolerance and goals rather than leaving it all on deposit.
• Retirement planning — check the proceeds, alongside your pensions, actually support the lifestyle you intend.
• Estate planning — cash sits inside your estate for inheritance tax in a way business assets may not have done.
• Using your pension allowances — including carry-forward of unused annual allowance from the previous three tax years.