Thinking of selling your business? Here’s how to get it right

If selling your business has been sitting on the “maybe someday” list, you’re not alone. Although the wider economic climate remains cautious, there are always owners who need or want to sell, prompting an important question: is now the right time for you?

Selling a business isn’t something most people do regularly. It’s a big decision, financially and emotionally, and getting it right takes planning. The good news? With the right preparation, you can protect what you’ve built and maximise the value you walk away with.

What does selling your business mean for you?

Before speaking to buyers or advisers, it’s worth being honest about what you really want. Do you want to:

• Sell up completely and move on?
• Take some money off the table but keep a stake?
• Step back gradually rather than all at once?
• Sell to your management team or a third party?

A sale isn’t the only exit route, and a full exit isn’t always the best option. Being clear about your personal goals early makes everything that follows far more straightforward.

How do most SME sales work?

Most UK SMEs are sold to a privately funded buyer or investor which may be another business in the same or a related sector; or the existing management team (a management buy‑out).

From a legal point of view, sales usually fall into one of two structures:

1. Share sales: You sell some or all of your shares in the company. This is often the preferred route for sellers, as it’s cleaner and usually more tax‑efficient for the seller. If you meet the conditions, you may qualify for Business Asset Disposal Relief, reducing Capital Gains Tax on qualifying gains. The target company continues to operate as before (with all its assets, employees and liabilities), but under new ownership.
2. Asset/business sales: All, or some, of the business assets are sold (such as goodwill, property, equipment or contracts) with the buyer sometimes assuming responsibility for certain liabilities. Buyers sometimes prefer this, but it can be more complex and less tax‑efficient for sellers. Employees may transfer under TUPE, particularly if the entire business is being acquired as a going concern, and there can be a double tax charge in extracting the sale proceeds.

A share sale would only be applicable where the target business to be sold is a limited company, whereas an asset sale can be used to acquire a limited company, an unincorporated business (such as a sole trader or partnership), or part of the business of an incorporated entity.

The structure matters far more than many owners realise, so it’s something to get advice on early rather than leaving it to the last minute. The differing tax implications of the two routes are often instrumental in driving the final transaction structure, so in addition to early legal advice, you should consult your accountant or tax adviser for a detailed consideration of the tax position as soon as possible; we would work closely with your accountant/tax adviser.

Will you be paid all at once?

Not always. While everyone likes the idea of a clean sale and a lump sum on completion, it’s increasingly common to see:

• deferred/instalment payments
• contingent deferred payments (such as earn‑outs) linked to future performance
• money held back to cover warranty claims.

These arrangements are common, but they do carry risk. A higher headline price doesn’t always mean more money in your pocket, so understanding the detail is key.

Is your business ready to sell?

Buyers pay a premium for businesses that are well run, well documented and easy to understand. If you’re considering a sale in the next couple of years, now is the time to get organised.

Ask yourself:

• Are the finances clear, accurate and up to date?
• Is the business profitable and showing consistent performance?
• Are key contracts, employment terms and compliance matters in order?
• Is the right to own, or occupy, property clear, with the right of ownership/occupation in the name of the business rather than the sellers?
• Could the business operate without you day‑to‑day?

Selling from a position of strength almost always leads to a better outcome than selling under pressure.

Timescale for selling your business

A share sale or asset sale is often a lengthy and stressful process. The usual timescale for completion of an acquisition, unless very simple where the buyer is not reliant on bank funding, takes at least three months to complete from the point of agreeing the heads of terms. Implementing good planning and preparation will ensure that the transaction runs smoothly and efficiently, with minimum disruption to the target company or business.

Why professional advice really matters

Even if you know your business inside out, selling it is a technical process. A good accountant and an experienced solicitor can:

• help structure the deal tax‑efficiently
• identify issues before a buyer does
• manage negotiations and protect your position
• keep the process moving when things get tricky.

Cutting corners on advice often costs far more in the long run.

Final thought

Selling your business is the end of one chapter and the start of the next. With the right preparation, you can reduce the stress, protect what you’ve built, and give yourself the best possible chance of a successful exit.

If a sale is on your horizon, even a year or two away, starting the conversation early could make all the difference.