How Do You Sell Your Business

Selling a business is one of the most significant decisions an owner can make. Whether you are retiring, moving on to a new venture or simply ready to realise the value you have built, the process of selling a business requires careful planning, legal attention and strategic thinking.

Getting it right can help you maximise the sale price, protect your legacy and ensure a smooth transition for staff, customers and suppliers. This guide walks through the key steps involved in selling a business in the UK, from preparation to completion.

Prepare your business for sale

Before putting your business on the market, take time to prepare it properly. Buyers will want to see a business that is well-run, profitable and positioned for future growth. Start by organising your financial records, updating contracts, tidying up loose ends and resolving any outstanding disputes.

You should also consider the structure of the business. If you are operating as a sole trader or partnership, a buyer may prefer to purchase the assets rather than the business itself. If you run a limited company, the buyer may acquire the shares, which includes ownership of the company as a whole.

A clean and organised business will attract more interest and give buyers confidence during due diligence.

Value your business

Setting the right price is crucial. Overpricing may put buyers off, while undervaluing can lead to a poor return for years of hard work. Business valuation is not an exact science, but there are common methods used, such as valuing based on net profit, revenue multiples or asset value.

Consider factors such as customer base, brand strength, recurring income, contracts, intellectual property and market position. It may help to hire a business broker or accountant who can carry out an independent valuation and explain what similar businesses in your sector have sold for.

Decide how to sell

There are different ways to sell a business depending on your goals and the nature of the buyer.

You may choose to sell to an individual buyer, such as a competitor or employee. Alternatively, you could sell to a corporate group or private equity investor, or pass the business on to a family member.

You will also need to decide whether to sell the shares of the company or just the assets. A share sale transfers the company in its entirety, including liabilities. An asset sale only includes specified parts of the business, such as equipment, stock, contracts and goodwill.

A solicitor will help you determine the most suitable route based on your tax position, liabilities and personal objectives.

Market the business

Once you are ready to sell, you need to find potential buyers. This can be done privately or through a business broker who will discreetly advertise your business to qualified buyers. Confidentiality is important, especially if you have staff, suppliers or customers who are unaware of the planned sale.

Provide potential buyers with an information pack that outlines the business model, financial performance, key staff, contracts and opportunities for growth. Be prepared to sign non-disclosure agreements before sharing sensitive information.

Negotiate and agree terms

When you receive an offer, you will need to negotiate the price and structure of the deal. This may include payment terms, whether you will stay on for a handover period, and whether any earn-out arrangements apply.

An earn-out is where part of the sale price is paid later, depending on the business’s future performance. These arrangements are common in service-based businesses or where the buyer needs assurance that profits will continue after the sale.

Once terms are agreed in principle, a Heads of Terms document is usually signed. This sets out the key elements of the deal, although it is not legally binding.

Due diligence and legal contracts

The buyer will then carry out due diligence, a detailed investigation into the business. This process involves reviewing financial statements, contracts, legal issues, employment records, tax compliance and other key matters.

You must be transparent and cooperative during this stage. Hidden problems uncovered during due diligence can reduce the sale price or even cause the deal to collapse.

After due diligence is complete, the final sale contract is drawn up. For share sales, this is typically called a Share Purchase Agreement (SPA). For asset sales, it is an Asset Purchase Agreement (APA). These documents include warranties, indemnities and legal protections for both parties.

Complete the sale

Once the final contract is signed, the sale is completed and ownership is transferred to the buyer. You may be asked to assist for a short period after the sale to ensure a smooth transition. This could involve introducing clients, training staff or helping with systems.

Funds from the sale are usually transferred upon completion. However, some deals include deferred payments, instalments or earn-out clauses, so make sure you fully understand the timing and conditions.

You will also need to deal with final tax returns, deregistration or updates to Companies House, and possibly paying Capital Gains Tax or claiming Business Asset Disposal Relief.

Business Asset Disposal Relief (formerly Entrepreneurs’ Relief)

When you sell your business, you may be eligible for a tax break known as Business Asset Disposal Relief. This relief, previously called Entrepreneurs’ Relief, allows you to pay a reduced rate of 10 percent Capital Gains Tax on qualifying business disposals, up to a lifetime limit of £1 million in gains.

To qualify, you must meet certain conditions. You need to have owned the business for at least two years up to the date of sale. If you are selling shares in a company, you must have held at least 5 percent of the ordinary share capital and voting rights and have been an employee or director during that time.

This relief can result in substantial tax savings, especially if you are selling a limited company, shares in a trading business, or your interest in a partnership.

Before finalising a sale, speak to an accountant or tax adviser to check whether you qualify and how to structure the transaction in the most tax-efficient way. Claiming the relief is done through your Self Assessment tax return, but you must ensure all qualifying criteria are met before the sale is completed.

Including Business Asset Disposal Relief in your exit planning can significantly increase the net amount you receive from the sale — making it an essential part of the process for many business owners.

Final thoughts

Selling a business is a major event and can be both financially and emotionally complex. The key to a successful exit is preparation, professional advice and patience. The more organised and transparent you are, the more likely you are to find a serious buyer and achieve a fair price.

It is strongly recommended to work with a solicitor, accountant and, where appropriate, a business broker to guide you through each stage. With the right approach, selling your business can be a rewarding step towards new opportunities or well-earned retirement.