How to sell a business in the UK

Selling your business is one of the biggest financial and emotional decisions you’ll ever make as an entrepreneur. Whether the change has been prompted by an unexpected offer, new opportunities, or if it’s time to retire, understanding how to sell a business properly can mean the difference between a successful transaction or a disappointing mistake.

In this step-by-step guide, we’ll walk you through the process. Let’s get started.

What’s the best way to sell my business?

Firstly, it’s important to remember that there isn’t a one-size-fits-all “best” way to sell a business. Every business and every sale is unique. 

But there are a few useful tips you should always keep in mind:

• Prepare thoroughly: Start by getting your finances, legal documents, and operations in order — ideally months in advance.
• Get a professional valuation: Know your business’s realistic market value.
• Time it right: If possible (and this can be tricky), time your sale so that you’re selling from a position of strength. Your business should be doing well.
• Maintain confidentiality: News of a potential sale can unsettle employees, customers, and suppliers, and potentially damage your business’s value. Use NDAs and carefully control the flow of information.
• Don’t go it alone: Don’t underestimate how complex it can be to sell a business. Professional advisers and brokers may seem expensive, but they typically quickly pay for themselves by managing the marketing, finding qualified buyers, and guiding you through the negotiation process. 

Does the size of the business I’m selling matter?

Yes, there are key differences involved if you are selling a small business versus selling a limited company. Selling a large corporation, as you might expect, is another matter entirely. 

The size of your business not only affects how you sell it, but also who you sell it to, the time the process is likely to take, and the price you can expect to receive.

• Small businesses typically involve simpler asset sales, less formal due diligence, and may rely more on local buyers or business brokers. The process is generally quicker but you’ll likely achieve lower multiples (this means that your business will probably sell for fewer times its annual earnings than a larger company).
• Limited companies involve more complex asset vs share sale decisions, formal due diligence processes, and greater regulatory compliance. You can expect higher multiples due to the economies of scale, and you’ll want to get professional advisers on board. You can expect the process to take between six and 18 months.

• Large corporations require extensive due diligence, regulatory approvals (potentially including Competition and Markets Authority clearance), institutional buyers, and detailed deal structures. The process can take 12 to 24 months and involves the input of a number of seasoned professionals.

Selling my business: A step-by-step guide

OK, let’s get into the weeds of selling a business in the UK. 

Step 1: Evaluate your reasons and timing

Before diving into the sales process, take a moment to think through why you want to sell your business and whether now is the right time. Are you interested in other opportunities? Are you trying to address financial pressures? Your motivations will influence everything from your asking price to how you structure the deal.

Also, consider the market conditions in your industry and the broader economy. While you can’t time the market perfectly, selling while your business and industry are performing well is in your interest.

Step 2: Conduct a business valuation

Understand your business’s worth — and be realistic about this. In the UK, some of the common valuation methods include:

• Book value, which you can work out by subtracting the liabilities it owes from the total value of its assets.
• Times revenue, which refers to its revenue over a specific period, usually a year, multiplied by a number specific to the company’s industry.
• Earnings multiplier, which values a business using its income or earnings.
• Discounted cash flow, which uses a company’s projected future cash flows to determine its current market value.
• Market capitalisation, which is calculated by multiplying a business’s total outstanding shares by its stock price.
• Comparable analysis, which values a business by considering the metrics of one or more companies around the same size in the same industry.

This process is important and can be pretty daunting if you don’t know where to start. You’ll likely want to hire a qualified business valuator or corporate finance adviser who understands your sector. They’ll be able to offer an independent assessment and help you understand what buyers in your market typically pay.

Read more: How to value a business: A step-by-step guide 

Step 3: Prepare your business for sale

The preparation phase is critical. If time is on your side, be slow and methodical here — this step may take between six and 12 months to compete. Key areas to focus on include:

Financial records

• Ensure your accounts are up to date and professionally prepared
• Gather three years of audited accounts, management accounts, and tax returns
• Prepare detailed profit and loss forecasts
• Document all assets, liabilities, and contingencies

Legal documentation

• Review all your contracts (employment, supplier, customer, and property leases)
• Ensure intellectual property is properly registered and protected
• Address any outstanding legal issues or disputes
• Update your company’s articles of association, if necessary

Operational improvements

• Strengthen your management systems and reduce any over-dependence on yourself
• Document key processes and procedures
• Address any operational weaknesses that might deter buyers
• Ensure key staff contracts are in place

Step 4: Pull together your professional team

Selling a business involves complex legal, financial, and tax considerations. Depending on the size of your business and the complexity of the sale, you’ll typically need a small team (at least) to help you navigate this process. You might want to hire:

• A corporate finance adviser or business broker to help market your business and find suitable buyers, assist with valuation and deal structure, and guide you through negotiations
• A solicitor to handle legal aspects of the sale, draft and review sale agreements, and ensure compliance with UK company law

• An accountant to advise on tax implications, help structure the deal tax-efficiently, and assist with due diligence preparations

• A tax adviser to maximise available reliefs, structure the transaction to minimise your tax liability, and advise on the timing of things 

How do I sell a business without a broker?

If you’re wondering if you can bypass a broker entirely, the answer is yes, you probably can. Be warned though: opting for this route will require significantly more time, effort and expertise on your part. You’ll need to market your business yourself, approach competitors and suppliers directly, and tap into your professional network for potential buyers or management buyout opportunities.

The no-broker approach works best for smaller businesses under £1 million or those interested in management buyouts. Larger businesses will often benefit from a broker’s network and ability to secure better prices.

Step 5: Create a comprehensive information memorandum

This document, sometimes called a sales memorandum, is your business’s sales brochure. It should include:

• An executive summary highlighting the key selling points
• A detailed description and history of your business
• Market analysis and competitive positioning
• Financial performance and projections
• Management team profiles
• Growth opportunities and strategic advantages

Hang onto commercially sensitive information for later in the selling process, but ensure your memorandum is robust enough to generate real interest from buyers.

Step 6: Market your business

It’s time to alert the sale of your business to the people and organisations that might be interested in buying it. Again, remember to hold on tight to confidential information. This is crucial to protect your business relationships and preserve employee morale. Always use NDAs before sharing sensitive information.

Then, identify your potential buyers. These might include:

• Competitors or industry players
• Private equity firms or venture capitalists
• Management buyout candidates
• Individual entrepreneurs
• International buyers looking to enter the UK market

You or your broker will likely approach them through any number of different marketing channels, including professional networks and industry contacts, business-for-sale websites and publications, and corporate finance advisers’ networks. Strategic buyers might require a more deliberate, targeted approach.

Step 7: Manage the due diligence process

Once you’ve identified serious buyers, you need to be prepared for them to conduct thorough due diligence to verify your business’s financial, commercial, and legal position. This typically involves:

• Commercial due diligence, like market analysis, customer reviews, and competitive positioning
• Financial due diligence, such as detailed financial record reviews and working capital assessments
• Legal due diligence, like contract reviews, employment compliance, and intellectual property verification
• Tax due diligence, including tax affairs review, liability assessments, and available reliefs analysis

It’s in your interest to make this process simple and transparent. Doing so will demonstrate your professionalism to potential buyers and help to move the process along smoothly, which could stand you in good stead when you start negotiating the terms of the deal.

Step 8: Negotiate terms and structure

Once you’ve found serious buyers, the negotiation phase begins. The most obvious point to discuss is the purchase price, but it’s rarely as simple as agreeing to a figure. You also need to consider:

Your payment terms

• Will you apply earnout provisions based on future performance?
• What about escrow arrangements for warranty claims?
• Are there going to be working capital adjustments?

Your deal structure

• Are you opting for an asset sale or a share sale? (This decision has significant implications, especially for tax)
• How are you treating existing debts and liabilities?
• What about employee transfer arrangements under TUPE regulations?

Warranties and indemnities

• What are the scope and duration of your warranties?
• What financial caps and limitations are you applying?
• Are there any specific indemnities for known risks?

Step 9: Navigate UK legal and regulatory requirements

Then, it’s onto the regulatory details. Before you complete the sale, you’ll need to file the necessary forms with Companies House for share transfers, comply with TUPE regulations for employee transfers, and obtain regulatory approvals if you operate in sectors like financial services or healthcare.

If you’re wondering, “do I pay tax if I sell my business?” the answer is, yes, you’ll usually pay Capital Gains Tax on the profit from selling your business, though Business Asset Disposal Relief can reduce this to 10% on gains up to £1 million if you qualify. The standard Capital Gains Tax rate is 20% for higher-rate taxpayers. Your tax liability depends on factors like how long you’ve owned the business, whether it’s an asset sale or a share sale, and your total income for the year.

Step 10: Complete the sale

At last, the most exciting part of the process — the culmination of potentially months and months of hard work. This final step involves the following:

• The final legal documentation: Execute the sale and purchase agreement, complete all ancillary documents, and fulfil any conditions precedent
• Post-completion obligations: Hand over all business records and documents, introduce the new owners to key stakeholders, comply with any restrictive covenants or non-compete clauses, and address any warranty claims or post-completion adjustments
• Financial settlement: Ensure all funds are properly transferred, release any escrow amounts, and complete final accounting and tax filings

And then, it’s onto whatever the future holds for you next, whether that’s a fresh position, a new business, or a permanent spot on a deck chair overlooking the ocean.

Quickfire summary

Selling your business is a huge move. While the process can feel overwhelming, following these steps methodically will help you navigate the process and boost your chances of a successful sale.

Remember that every business sale is unique, and what works for one may not work for another. The key is to give yourself enough time, prepare thoroughly, and surround yourself with experienced professionals who understand both your sector and the UK regulatory landscape. Do this, and you’re more likely to walk out with a price and arrangement you’re happy with, so that you can confidently set off on your next venture.