A guide to selling your business – How to prepare, plan and maximise value

1. Advisors: Develop a team including a corporate finance advisor, lawyer, M&A tax specialist, and wealth manager.
2. Personal objectives: Define your goals for the sale, whether for financial security, retirement, ill health or new ventures.
3. Business valuation: Obtain a professional valuation of your business to understand its market value. This will provide a solid foundation for pricing and negotiations.
4. Wealth requirements: Assess your financial needs and set a minimum sale price; most vendors can sell earlier than they expect.
5. Exit options: Understand different exit options like selling to a strategic buyer, private equity, a management buyout or a cash-out deal.
6. Make it easy: Simplify your business by streamlining operations, dealing with all material issues, and ensuring that all processes are well-documented. A business that is easy to take over is more attractive to potential purchasers.
7. Management: Ensure a strong management team is in place. Purchasers will look for a proven competent team that can maintain and grow the business post-sale.
8. Due diligence: Prepare for the purchaser’s due diligence by undertaking your own. Organise all necessary documents and information. This includes financial records, legal contracts, intellectual property, and any other relevant data. Being well-prepared can expedite the process and build purchaser confidence.
9. Timing: Choose the right time to sell based on market conditions, business performance, and personal readiness. Timing can significantly impact the sale price and overall success of the transaction. Typically, most vendors wish they had planned earlier than they did, and a number hang on too long.

1. Understand your value drivers

Obtain a ‘willing buyer willing seller’ business valuation so that you understand how purchasers might approach assessing an offer for your business.

This valuation will enable you to assess the key value drags and value drivers. Use this insight to improve your business and address any weaknesses – working on your business rather than in it. Having a focused improvement plan can help position your business to become more attractive to potential purchasers.

2. Improving operational performance

Most businesses are valued on a multiple of EBITDA. By understanding this, you can make simple sustainable changes to your business that can improve EBITDA and perhaps improve the multiple used. For example, a simple option is to cut out unnecessary costs.
Areas that we have seen increase the desirability and valuation of a business are:

• Delivering revenue growth
• Revenue secured by contracts/orders
• Creating an effective sales and lead generation team
• Recurring revenues from blue chip clients
• Investing in your systems and gathering key KPI information on your business
• Investing in a management team to work on the business and develop your talent
• Identifying and implementing cost improvements by making processes more efficient (including products, overheads, and procurement)
• Adopting technology to support your plans
• Reducing working capital
• Focusing on operational improvements prior to sale can lead to a greater return on the purchase price.

3. Invest in management

It may seem counterintuitive to build a management team when exiting, but it can be really important to have a strong management team at the point of exit. Many vendors think that a purchaser has bandwidth to drop in ‘spare’ management but in reality, this is highly unlikely and it may impact price and ability to sell if you don’t have a management team that can keep operating the business.

Investing in a management team also provides you with more exit options such as a management buy-out or private equity deal.

There are two principal areas of tax to consider when selling a business:

1. Capital gains tax (“CGT”) which is essentially the tax on any profits realised from the sale of the shares. Where the relevant qualifying conditions are satisfied, Business Asset Disposal Relief (formerly Entrepreneurs’ Relief) (“BADR”) may be available to reduce the rate of CGT levied on the first £1m of gains (per shareholder) realised from the sale transaction.

2. Inheritance tax (“IHT”) which is levied on the value of an individual’s net assets at the date of their future death. In particular, subject to satisfying the relevant qualifying conditions, business property relief (“BPR”) may be available to exempt all or part of the value attributable to shares held in a trading company.

There are areas of planning a shareholder can undertake to mitigate the impact of CGT including setting up investment vehicles or maximising the use of BADR across various family members.

BPR will become less generous from April 2026, as whilst it has historically been possible to pass shares down to the next generation on death, without incurring any IHT liabilities, this relief will effectively be capped at £1m per individual in the future. The remaining value will then be subject to IHT at an effective rate of 20%, such that many shareholders will now be considering whether to realise their value and make cash gifts to family members instead, which should fall outside of their estate for IHT purposes, subject to them surviving 7 years from the relevant payment date.

1. What happens if you leave things until “later”?

Delaying planning can result in less favourable outcomes for you, your family, or your business. Unexpected offers, changing market conditions, or personal health issues can force sudden decisions. By planning ahead, you can better navigate these surprises. We have seen people hang on too long, waiting for that ‘better’ offer, but it rarely comes. At the same time the owner’s energy to keep running the business declines, and so does the business.

2. How long does it take to sell a business?

For a full marketing process it typically takes anywhere from six months to a year.

3. How should I expect to stay in the business post sale if I am seeking to exit?

We tend to advise clients this could be up to two years post completion, but it depends on the purchaser and your role in the business.

4. When is the right time to sell a business?

Timing depends on personal circumstances, business performance, and market conditions.

5. What are the key steps in the business sale process?

The process typically involves preparing the business for sale, valuing the business, preparing an information memorandum to explain your business in detail, marketing it to potential purchasers, negotiating terms, and completing the legal and financial aspects of the sale.

6. Why do I need a corporate finance advisor when selling my business?

A corporate finance advisor will ensure you have a clear understanding of your current position and future needs, and will guide you through each step of the process – pre-sale, during the sale, and post-transaction. They help build the right advisory team tailored to your needs.

Building long-term relationships with your advisor early allows for better understanding and planning. They can support you in assessing the value of your business, which is key to enabling you to look at how to position your business for exit. They can also highlight the key risks in your business which could act as value drags.

7. What are the common mistakes to avoid when selling a business?

Many sellers don’t allow enough time to exit. If you want to retire, you really should be thinking of planning for a sale process at least 3 years before you actually want to step down. We recommend 3-4 years of planning but you really can’t start soon enough.
Common mistakes include not planning ahead, failing to get a proper valuation, not preparing the business for due diligence, not investing in management, not addressing issues early and not seeking professional advice early in the process.

8. How do I find the right buyer for my business?

Identifying the right buyer involves understanding the market, knowing what potential purchasers are looking for, and effectively marketing your business to attract the right kind of interest. Your advisor should be able to help with this.

9. I want to sell now; is it too late as I have not prepared?

The short answer to this is no, some vendors do not plan and are still able to sell. You might get a sub-optimal deal, but if it achieves the majority of your goals then it’s still worth doing. We tend to run a condensed planning session in the run up to a sale, so we can address key issues during the deal.

10. What should I do after selling my business?

Post-sale considerations include managing the transition, handling employee and customer communications, and planning for your personal financial future.

In regard to the latter, most clients don’t realise the financial pressure that comes with turning a business into cash – so, whilst you have financial freedom the pressure comes from making sure you secure it for you and future generations. This includes making sure you optimise a return on investments, but also protecting the funds from fraud. Holding discussions with a wealth advisor can be important for you to understand you options.