The Guide to Selling Your Business

Selling a business is a significant undertaking that involves meticulous planning and execution. The process can be intricate and time-consuming, especially in today's market where buyers are well-informed and due diligence requirements are extensive. To ensure a successful transaction, business owners must be thoroughly prepared and well-advised. 

Buyers, including private equity firms and large corporations, often employ teams of professional advisors to assist with various aspects of the acquisition process. Without a comparable team, business owners may find themselves at a disadvantage. This guide aims to demystify the sale process and offer practical advice on how to prepare your company for a successful sale. Whether you're considering selling in the near future or aiming to enhance your company's long-term value, this resource is designed to assist UK-based business owners across all sectors. 

Successfully selling your business

It takes meticulous planning and expert advice for a smooth transaction. Download the document now or read further to learn more about how to plan a successful business sale.

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To navigate the complexities of selling your business, it's crucial to assemble a team of experienced advisors well before initiating the sale. This team typically includes: 

Accountants  

Engage a reputable accountancy firm to prepare accurate, UK GAAP-compliant financial statements and support you in ensuring your tax affairs are compliant and up to date. High-quality financial information is essential for both internal assessments and presentations to potential buyers. Discuss with your advisors whether audited financial statements or a financial due diligence report is appropriate for your business. Proper financial documentation helps prevent tax and accounting issues that could jeopardise the sale. 

Corporate Finance Advisors 

Your corporate finance advisor will coordinate the transaction from start to finish. Select a firm with relevant experience, industry knowledge, and a strong reputation. They can provide real-time market insights, identify areas for improvement, and advise on the optimal timing for the sale. 

Transaction Advisory Services 

Conducting sell-side due diligence before going to market has become standard practice. This process evaluates your business from a buyer's perspective, allowing you to address potential issues proactively. A financial due diligence report can facilitate a smoother transaction by preparing you for buyer inquiries and enabling buyers to make informed offers earlier. Furthermore, undertaking a tax vendor due diligence process helps identify areas of inherent tax risk, and where addressed early mitigation options may be available to reduce potential exposures.  

Legal Advisors 

Choose a law firm specialising in mergers and acquisitions rather than general corporate law. An experienced M&A lawyer can guide you through the intricacies of the sale, ensuring that you understand market standards for key contractual terms. They should be able to explain complex legal matters clearly, helping you make informed decisions without unnecessary delays. 

Even if a sale is not imminent, understanding market conditions and maximising your company's performance and profitability is always beneficial. Preparing your business involves assessing various factors that could impact the sale. Some improvements may require time to implement, so early engagement with objective, third-party advisors is advisable. 

Tax Planning 

In addition to ensuring the tax compliance and control environment is ready for buy-side due diligence enquiries, it is important to consider tax planning more widely to understand whether actions need to take place in advance to help facilitate the transaction, such as pre-sale restructuring, tax efficient incentivisation of key employees and assessment of available tax assets which could drive value through a process. 

Once you are within a process, an experienced tax advisor can help you evaluate different deal structures that buyers might propose together with supporting you with the tax impact of key items being negotiated in the completion mechanism. They can also prepare illustrative net proceeds analyses for various transaction types, helping you understand the financial implications of each for both the company and shareholders. 

Intellectual Property and Assets your business owns intellectual property or assets in different jurisdictions, consider consolidating them to simplify the sale. Proactive assessment of potential tax risks, compliance issues, and asset valuations can make your business more attractive to buyers. 

Understanding your business's strengths and weaknesses is crucial. An advisor can help you  maximise profitability, mitigate underlying operational risks and determine how the market might value your company. Key areas to evaluate include: 

Management team 

A strong management team adds significant value. If you're heavily involved in daily operations, potential buyers might want you to stay on post-sale. Develop a succession plan and distribute key responsibilities among capable team members to reduce dependency on any single individual. 

Growth prospects 

Demonstrating sustainable growth is essential for maximising value. Document your growth strategy with realistic and defendable financial projections supported by a scalable operating model. Establish and track key performance indicators (KPIs) including sales efficiency and return on investment. 

Profitability 

While increasing sales is important, the quality of those earnings matters. Focus on improving profit margins and controlling overheads. Identify future opportunities for margin expansion that a new owner could leverage. 

Capital expenditure 

Consider the timing of significant capital investments. While it's important to maintain and improve assets, you should evaluate whether major expenditures are necessary before the sale. Buyers will assess the quality and longevity of assets when determining their offer. 

EBITDA adjustments 

Identifying adjustments to your earnings before interest, taxes, depreciation, and amortisation (EBITDA) can provide a clearer picture of your company's financial health. These may include removing one-off expenses or normalising owner compensation. A QoE report can help substantiate these adjustments. 

Working Capital 

Buyers typically expect a normal level of working capital at closing and comfort that sufficient cash exists to support the future growth of the business. Work with your advisors to understand how working capital requirements affect the transaction and explore opportunities to optimise it before the sale. 

Selling your business is likely one of the most significant financial decisions you'll make. Objectives may vary, but common goals include maximising sale price and ensuring the future well-being of employees and customers. Navigating the transaction process effectively often requires the support of experienced advisors who can manage the complexities while you continue to focus on running your business.

Key Points

  • Timeframe: The sale process can take longer than anticipated, often several months.
  • Preparation: Early planning and assembling the right team are crucial.
  • Support: Trusted advisors can alleviate the administrative burden and help achieve your objectives.

A controlled sale typically involves:

  • Preparing the business for sale 
  • Determining likely value and preferred deal structure 
  • Completing thorough tax planning
  • Conducting vendor due diligence 
  • Compiling due diligence materials and preparing an information memorandum 
  • Identifying and contacting potential buyers 
  • Soliciting initial expressions of interest 
  • Hosting management presentations with shortlisted buyers 
  • Soliciting formal offers 
  • Negotiating and signing a heads of terms or letter of intent 
  • Facilitating confirmatory due diligence 
  • Finalising legal documentation 
  • Completing the transaction 
  • Providing post-completion support for any adjustments or obligations

The sale process demands a significant amount of information and can be taxing on your management team. While advisors can assist with coordination, the accuracy and timeliness of information ultimately rest with you. Potential buyers may lose confidence if there are delays or inconsistencies in the information provided.

Typically, the sale process can take 4-6 months or longer. During this time, your business must continue to operate effectively. It's advisable to begin compiling necessary documents well in advance. This includes contracts, financial records, compliance documents, and any other material information.

Key points

  • Duration: The process can last several months; plan accordingly. 
  • Information: Be prepared to provide comprehensive and accurate information to potential buyers. 


Before initiating the sale, consider your preferred deal structure: 

  • Sale of shares vs. assets: Decide whether selling the company's shares or its assets aligns better with your objectives. 
  • Form of consideration: Determine whether you prefer an all-cash deal, or would consider deferred payments, earn-outs, or equity in the acquiring company.
  • Retention of assets: Identify any assets you wish to retain and plan how to separate them from the business. 
  • Tax implications: Engage tax advisors to understand the tax consequences of different deal structures and optimise your net proceeds. 

Key Points 

  • Tax planning: Early tax planning can significantly impact your financial outcome. 
  • Deal terms: Clearly define your requirements and communicate them to potential buyers. 

An information memorandum (IM) introduces your business to potential buyers. Prepared with the assistance of your corporate finance advisor, the IM should: 

  • Present your business positively while maintaining accuracy. 
  • Provide sufficient information for buyers to assess the opportunity. 
  • Highlight key investment considerations, business model, management team, market opportunities, growth strategies, and financial performance. 

Be transparent about any challenges or risks to build trust with potential buyers. Misleading information can undermine the transaction and damage credibility. 

Key Points 

  • Transparency: Accurate and complete information fosters trust. 
  • Clarity: Buyers should easily understand the business and its potential. 

Decide whether to approach multiple potential buyers or engage in exclusive negotiations with a single party. While dealing with one buyer may seem simpler, a competitive process often results in better terms and a higher sale price. 

An experienced advisor can manage a controlled sale process, maintaining confidentiality while reaching a targeted group of qualified buyers. This approach can create competitive tension, encouraging buyers to present their best offers. 

Key points 

  • Competitive advantage: Multiple bidders can lead to better terms. 
  • Process management: An advisor can tailor the approach to suit your objectives. 

Set a firm deadline for receiving initial expressions of interest. These indicative offers are typically based on the information memorandum and preliminary discussions. Work with your advisors to evaluate these offers, considering not just the price but also terms, conditions, and the buyer's credibility. 

From these offers, shortlist the most suitable buyers for the next phase. Be mindful that initial offers are non-binding and may change as due diligence progresses. 

Key points 

  • Deadline: Establish clear timelines for receiving offers. 
  • Evaluation: Consider all aspects of the offers, not just the financial terms. 

Management presentations are pivotal in advancing the sale process. They provide an opportunity for potential buyers to meet your team, understand the business more deeply, and assess strategic fit. Preparation is crucial: 

  • Agenda setting: Define clear objectives for the meetings. 
  • Rehearsal: Conduct practice sessions to refine your presentation. 
  • Confidentiality: Be cautious about disclosing sensitive information. 

Following these meetings, be prepared to provide additional information as buyers refine their offers. Your advisors can help manage data requests to prevent overwhelming your team as well as prepare financial and tax due diligence reports to aid buyer understanding of the business and maintain competitive tension between interested parties. 

Key points

  • First impressions: Effective presentations can enhance buyer interest. 
  • Preparation: Invest time in preparing for meetings to maximise their impact.

After the management presentations and due diligence, you'll receive formal offers. Your advisors will help you negotiate terms and may recommend a preferred bidder. Consider factors such as: 

  • Price and terms: Evaluate the financial offer alongside conditions and contingencies. 
  • Strategic fit: Assess how well the buyer's vision aligns with your company's future. 
  • Certainty of completion: Consider the likelihood of the deal closing successfully. 

Once you've selected a preferred buyer, you'll proceed to finalise legal agreements and complete the transaction. Your legal and financial advisors will play key roles in this phase, ensuring that all documentation is in order and that the deal structure meets your objectives, together with flagging those post-closing actions that should form part of your 100-day plan.  

Key points

  • Negotiation: Aim for a deal that meets both your financial and strategic goals. 
  • Completion: Effective management of the final stages is crucial to avoid delays or complications.

How we can help

Selling your business is a significant milestone that requires expert guidance. We offer comprehensive support throughout the entire process: 

  • Strategic planning: Assisting with initial assessments and preparation. 
  • Financial Advisory: Providing insights into valuation and deal structuring. 
  • Tax support: Ensuring that the transaction is tax-efficient, managing inherent tax risks, and supporting with modelling out the availability of tax attributes. 
  • Process management: Coordinating all aspects of the sale to ensure a smooth experience. 

Our team is committed to helping you achieve the best possible outcome, tailored to your specific needs and objectives.

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