How to sell a business?
If you are thinking about selling your business, you will need to prepare your company for a sale by doing your due diligence. Depending on your objective you will need to go through a process of ‘business optimisation' to ensure you will get the best possible price. The main areas you will need to do your due diligence in is:
- Finances
- Your IT infrastructure
- Your business strategy
Buyers will want to see clear and ideally healthy accounts and they will want to know the state of your IT infrastructure in case they need to invest in new equipment or software. Last, but no means least, you will need to review your current business strategy to ensure it is robust and appealing to investors or buyers. Another piece of advice we always give businesses, large or small, is to ensure all of your ‘housekeeping' is up to date. This includes any human resource matters, formalising contracts and dealing with any other paperwork that may impede your business' sale.
Any potential buyers or investors will also conduct their own due diligence, so ensure you present this information well, and if there are problems, honesty is the best policy if you wish to achieve the best possible price.
Steps to selling a business
Many business advisers liken selling a business to selling a house. You will need to decide if you want to sell in the best condition possible for the top market price or as a ‘doer-upper’. Our expert commercial and corporate solicitors can advise you on what they think is best for your situation.
What is your objective?
Before you commit to a sale you need to decide whether you would like to remain involved in the business, sell a minority stake, sell a specific element of your business or do you want to retire and exit altogether? Any legal advice you receive will be tailored to your specific circumstances and the exit strategy you wish to take.
Think ahead
You want to get the best price for your business, and this means starting the sale process at least a year prior to completion and commencing the preparation in earnest at least six months beforehand. The value of your company will be affected by the market at the time of the sale. You should, therefore, work closely with your business solicitor to best market and present your business for sale. This includes managing the unrecoverable debts, mitigating any potential claims against the business and ensuring a sound business model/plan is in place.
The business will also need to manage dividends, drawings and expenses well in advance of the sale. It is vital that you work with your accountant to ensure you can demonstrate the profitability of the business. The due diligence searches will uncover the steps you have taken demonstrating that your business has been run effectively and efficiently.
You should also ensure that your key contracts with customers and suppliers are all in order. If you are intending on selling shares in a limited company, then a shareholder’s agreement should be drawn up as a priority to ensure that the shareholders are all in agreement as to what will happen upon a sale.
Develop a realistic growth plan
Most potential investors or buyers will want to see a realistic growth plan or business strategy going forward. You will need to answer questions such as what are the potential expansion opportunities available for a buyer? You will also need to be well versed in the state of your specific industry and the opportunities available for the new owner as well as the evidence to back this up.
Establish an effective and efficient management structure
How is the current management structure set up and will it ensure the business continues to operate effectively and profitably when the current owners and shareholders are no longer part of the team? Any potential buyer will want to be reassured that the transition of the business to new ownership will be seamless. It is important to consider succession planning and leadership.
The juggling process of preparing for a sale and the transaction itself, whilst continuing to run a business, can be a daunting task. Serious consideration should be given to appointing a director or a general manager to run the day-to-day business in the interim.
Remove cost inefficiencies
A buyer will be disincentivised by an acquisition which will require a significant investment post-sale. Equally, by cutting unnecessary costs, the profitability of the business will increase, leading to higher returns in the sale. Therefore, carefully review any major expenses which will affect profitability along with general overheads.
Financial controls
Buyers will want to see the company’s current accounts amongst other financial documentation. This information needs to be presented in a simple format and any discrepancies on the balance sheets need to be explained.
Identify a buyer
Beware of commencing the sales process too soon. You want to avoid being involved in the process of putting things right in the business when you have your potential buyer and their advisors observing and scrutinising your progress.
Discretion is key
The sale of a business can create considerable unrest among your team, customers and suppliers. So, keep it under wraps until there is a committed buyer and a deal on the table. It can be difficult to keep the sale confidential, but brokers and blind advertisements in the marketplace can help to get the word out to potential buyers.
Seek professional advice
Identify your professional advisers early on in the process. You will need the best available advice from a lawyer, accountant, specialist tax adviser and broker or corporate finance adviser to find a buyer and negotiate the sale. The advisors you have chosen can assist in deciding on a realistic valuation, gather financial information, discreetly solicit possible buyers, produce the sales memorandum and confidentiality agreement for interested parties and negotiate a beneficial sales agreement.
If you are thinking about selling your business and need expert legal advice call one of our corporate lawyers on 01616 966 229 today.
What our clients say
We sold our business and we’re reassured, all through the process. Louise Hebborn explained every step and made sure we understood everything. She always had our best interest at heart and strived to get the best outcome for us. This meant more work for her, but that was irrelevant. She worked tirelessly for many months and also continued to support us after completion. Nothing was too much trouble and I always felt I could pick up the phone at any point, if I needed to ask or confirm anything.
Selling a business FAQs
Selling a business takes a lot of work and preparation. Take a look at our FAQs on selling a business below.
How to start a selling business?
When you are looking to sell your business, you will need to prepare your business for sale. This means ensuring that the accounts are clear and up to date, all paperwork such as contracts, legal claims and HR issues are resolved, recover (if possible) any outstanding debt, prepare a realistic and robust business strategy and ensure your IT infrastructure is in good shape. Once you have prepared your business for sale you can work with a broker or sales agent to start courting buyers.
How to value a business to sell?
A business is usually valued as a multiple of sustainable profits, adjusted to take account of things like finance charge and excessive director salaries, which are usually added back. This multiple can vary widely anything from two to as much as ten times, but the average will be around two to six times. The multiple applied will be determined as a result of various factors. Invariably, a business is valued on adjusted sustainable profits. You should seek to maximise this figure as much as possible while grooming your business for sale. Your accountant will advise you on the value of your business.
How to sell a small business in the UK?
If you are looking to sell a small business you will still need to do your due diligence. We recommend auditing your business from the viewpoint of a buyer. This means looking at everything that contributes to your business' success from facilities, products and people to marketing and your brand image. Reflect on the findings and take time to improve on anything you see lacking before commencing the sale process.
It might seem trivial, but assess the physical appearance of your premises as first impressions can influence the negotiation process. Also, make sure that your lease has a sufficient term left on it to be saleable to a buyer. This can be particularly important in some sectors where the value is largely in the premises, such as retail, distribution and leisure sectors.
You need to be able to present the potential buyer with hard data on how predicted future growth and expansion will be achieved. You will need to have a clear business plan which is supported with evidence of what has been achieved previously and the prospects of predictable and consistent growth.
How to sell a franchise business?
In the UK, if you are planning to sell a franchise, we recommend that you start planning a year or two ahead of the time you wish to exit the business. During this time it's important that you identify any weaknesses in the business and try to find a suitable and sustainable solution to them.
Selling a franchise is like selling any other business, you need to do your due diligence and ensure your finances look good and all your customers, suppliers and staff have the relevant contract. When it comes to IT, you are probably working with equipment and software that the whole company uses, so this may not be as relevant as it is with other businesses.
However, the main difference between a franchise and other businesses is that the franchisor will most likely have the final say on whether the buyer you have found is suitable. They may even have a list of potential buyers already, so it's important to liaise with your franchisor from the start.
If you are selling your franchise, you will still need advisors such as an accountant and a corporate lawyer. Our franchise solicitors are experts in their field and can help you prepare your franchise for sale – contact Stephensons today on 01616 966 229 .
How much does it cost to sell a business?
The main cost of selling a business lies with your advisors’ fees. Typically, when selling a business, you will need help from:
- A corporate finance adviser
- A corporate lawyer
- A broker
- An accountant
A corporate advisor will help you to prepare the business for sale and some may help you identify potential buyers. If your corporate advisor does not have expertise in finding a buyer, you may need a broker. A broker works in your interest so it may be a worthwhile investment.
An accountant will help you sort out your books and finances– a vital part of selling a business. A corporate lawyer will draft and negotiate the sale agreement and our expert commercial solicitors can also help with formalising contractual relationships with your customers, suppliers and employees. We always recommend discussing your plans to one of our business lawyers before you begin the sales process.
You will also be liable for capital gains tax (CGT) when you sell your business. Depending on your circumstances you may be able to pay a lower rate of CGT if entrepreneurs' relief is available to you.
Do I need a solicitor to sell my business?
You do not have to use a solicitor to sell a business, however, it is highly recommended that you use one. Selling a business is a highly complex process and a solicitor will help you prepare the business for sale by:
- Ensuring all contracts with customers, suppliers and employees are up to date
- Draw up a non-disclosure agreement (if applicable)
- Draft any warranties
- Draft and negotiate the sales agreement
When it comes to contracts, the wording is very important. It will be your solicitor's job to ensure the wording of the contract is correct so that it protects you and your interests.
The fees your solicitor will charge will depend on the services you require. At Stephensons, we typically bill by the hour or we may be able to negotiate a fixed fee if appropriate. All of our fees are competitive and reflect the expertise of our team. To discuss payment options, contact us today.
How much time does it usually take to complete the sale of a business?
Once we are formally instructed, the transaction typically takes around 6 to 8 weeks to complete. That said, the exact timeline can vary depending on a number of factors including how efficiently all parties (and their advisers) work, the complexity of the deal, and whether there are any difficult issues to negotiate.
One of the most time-consuming and unpredictable parts of the process is due diligence. This stage involves the buyer reviewing key financial, legal, and operational aspects of the business and can differ greatly depending on the size and nature of the company. If you're considering a future sale, it’s sensible to start preparing well in advance to ensure your business is in the best possible position for a smooth transition. We generally become involved once a buyer has been found and a sale price agreed, but before the legal structure and heads of terms documentation are finalised.
What are ‘heads of terms’ and what role do they play in a business sale?
One of the initial documents prepared during a business sale is the heads of terms. This document outlines the principal terms agreed between the buyer and seller at the early stages of the transaction.
Although most of the provisions in the heads of terms are not legally binding, certain elements, such as confidentiality, exclusivity, and responsibility for costs, often are.
The purpose of the heads of terms is to ensure both parties are aligned on the fundamental aspects of the deal before entering the due diligence phase or drafting detailed legal agreements. It helps set expectations and can streamline the process by addressing key commercial points upfront.
What should I know about prospective buyers before selling my business?
When selling a business, it's important for sellers to carry out their own checks on the potential buyer. This can help ensure the buyer is financially capable of meeting the agreed terms, especially if part of the purchase price is deferred and payable after completion.
If the buyer is offering shares in their company / a group company as part of the consideration, the seller should take steps to confirm that the buyer is authorised to issue those shares. It's also crucial to determine whether any third-party consents or waivers are needed, and to understand the value and nature of the shares being received.
What key steps take place at the completion stage of a business sale?
The completion of a business sale often mirrors aspects of a property transaction, with the key documents required to transfer ownership being signed, dated, and exchanged, usually by email or other remote means. Unlike property sales, however, many business sales don’t involve a separate exchange and completion; instead, the transaction is finalised in full on a single agreed date. This means both sides must ensure that all documentation is signed and in the hands of their solicitors in time for completion.
There are also various practical matters to consider. If the sale includes premises, this could involve handing over keys, alarm codes, and access information. It’s also common to transfer trading records, notify staff of the ownership change, and ensure that anything excluded from the sale, such as personal items or third-party property, is removed in advance. In some cases, valuations of stock or assets are carried out on the day of completion.
If the sale doesn’t involve real estate, focus shifts to ensuring that all business assets being transferred, such as equipment, IT hardware, or vehicles, are handed over or made accessible to the buyer in a timely manner. There should also be key focus on the buyer being able to pick things up from the seller immediately, so the buyer will need access to bank accounts, HR records and so on from completion onwards.
Will I still have any legal obligations or risks after the sale goes through?
Yes, sellers usually remain bound by certain legal responsibilities even after the sale is completed. It's uncommon for a business sale to conclude without the seller providing contractual protections to the buyer, most commonly in the form of warranties and indemnities relating to the business’s historic operations.
These post-completion obligations typically run for set periods: general warranties (such as those relating to employees or contracts) are often in place for a full accounting period at least 18 months but up to three years, while tax-related protections may last up to seven years.
When representing sellers, we work to reduce the scope, duration, and financial impact of these liabilities wherever possible. In some cases, a buyer may request that a portion of the purchase price is held back, known as a "retention", to cover any future claims. Our role also involves negotiating to limit or remove such withholdings to help ensure the seller receives the more of the of the value of the deal at completion.
Am I required to sign non-compete clauses or other agreements during the sale process?
When purchasing a business, it is common for buyers to seek contractual safeguards to ensure the seller does not act in a way that could damage the business post-sale. This is particularly important when the seller possesses detailed knowledge of the company and has established relationships with its customers, suppliers, or staff, which could be leveraged to compete unfairly.
To address these concerns, the sale agreement often includes restrictive covenants that apply after completion. These clauses typically prevent the seller from establishing or becoming involved in a competing business, soliciting former clients, suppliers, or employees, and using the company’s intellectual property or confidential information. The purpose of these provisions is to protect the buyer’s investment and ensure that the business can continue to operate without disruption or immediate competition from its former owner.
Is a buyer allowed to withdraw after signing the heads of terms?
Each set of Heads of Terms is unique to the transaction, so it’s hard to make broad generalisations. In most cases, the Heads of Terms are not legally enforceable, except where an exclusivity period is agreed. During this exclusivity period, either party can walk away from the deal, but they remain bound by the terms of exclusivity.
However, if the seller decides to withdraw, there could be additional consequences. For instance, corporate finance broker fees might become payable, or there may be specific compensation agreed upon in the Heads of Terms that the seller owes the buyer. Regardless, both parties are generally responsible for any professional fees already incurred, such as legal or accounting expenses.
It’s crucial to fully understand the implications before choosing to cancel a transaction.
Specialist in acting for sellers of a business both share and asset sales
When you are preparing to exit, the difference between a smooth, value‑maximising deal and a difficult one often comes down to having the right selling a business solicitor at your side from the outset. As a business sale solicitor team within Stephensons’ corporate practice, we help owners structure, negotiate and complete disposals efficiently, whether that is a full share sale, an asset sale, a carve‑out or a partial exit.
What a business sale solicitor actually does for you
The legal work on a sale is about much more than drafting the contract. Your solicitor guides strategy and reduces risk from day one. We review and shape the heads of terms to protect your bargaining position, scope the optimal sale structure with your tax and corporate finance advisers, and set up a secure data room to streamline buyer enquiries.
We prepare and negotiate the key documents, including the share purchase agreement or asset purchase agreement, the disclosure letter and ancillary documents such as board minutes, stock transfer forms, assignments of intellectual property, deeds of novation, consultancy agreements and restrictive covenants. We also manage landlord consents, banking pay‑offs and releases of security, change‑of‑control consents from customers and suppliers, employee communications and any regulatory approvals required. On completion we coordinate signatures, funds flow and post‑completion filings so you can transition cleanly with minimal disruption.
Share sale or asset sale explained in plain language
In a share sale you sell the shares in your company and the buyer acquires the company with all its assets and liabilities. This is often simpler for continuity of contracts, licences and brand, but you will be asked to stand behind warranties and indemnities for historic matters. In an asset sale, specific assets, goodwill and contracts are transferred out to the buyer and liabilities usually remain behind unless expressly assumed.
That can be attractive where legacy issues exist, but it may require more third‑party consents and employee transfers under TUPE. The best route depends on price, tax, liabilities, commercial relationships and timeline. A business sale solicitor will weigh these factors and negotiate adjustments to preserve value whichever route you choose.
Protecting your price and reducing risk
We focus relentlessly on deal mechanics that secure the price you agreed. That includes locked‑box arrangements to prevent value leakage between signing and completion, or carefully drafted completion accounts provisions and working capital targets where appropriate. For any deferred consideration or earn‑out, we negotiate robust security such as guarantees, charges or escrow and set practical performance metrics with clear information rights. We work to cap and limit warranty liability, narrow indemnities, and agree sensible claim thresholds and time limits. Where useful, we explore warranty and indemnity insurance to shift risk away from you while keeping the buyer comfortable.
Vendor due diligence that accelerates completion
Proactive vendor due diligence saves time and reduces renegotiations. We help curate a clean, well‑organised data room with clear financial packs, key contracts, IP registers, employment records and GDPR policies. We draft a thorough disclosure letter that tells the right story, preventing duplication in buyer enquiries and lowering warranty risk. Our team runs Q&A to keep momentum, implements robust non‑disclosure agreements and ensures only necessary information is shared at each stage to protect confidentiality.
Sector experience that adds commercial value
We advise owner‑managers, founder teams and investors across manufacturing and engineering, technology and software, healthcare and dental, professional services, logistics, retail and hospitality. Because we understand sector‑specific regulation, contracting norms and deal pressures, we can anticipate sticking points early and propose practical solutions that keep your timetable and your buyer’s confidence intact.
Why choose Stephensons for your business sale
Choosing the right legal partner is pivotal when you are selling your company. Stephensons is regulated by the solicitors regulation authority and holds the law society’s Lexcel quality mark, reflecting our commitment to rigorous risk management and client care. Our corporate team combines the responsiveness of a dedicated deal unit with the breadth of a full‑service firm, so you have immediate access to employment, commercial property, intellectual property, disputes and banking specialists when your transaction needs them.
We are recognised in independent legal directories and act for clients nationwide, working seamlessly in person and remotely to suit your schedule. You benefit from partner‑led strategy, plain‑English advice and measured, commercially minded negotiation that protects your position without inflaming tensions with the buyer. Clients consistently tell us they value our clarity on timelines and costs, our availability when deals become fast‑paced, and our ability to keep momentum through to completion.
Transparent fees and clear scope
No two sales are identical, so we start with a detailed scoping call to map structure, counterparties, timeline and likely pressure points. We then provide a clear proposal with a pricing model that fits the deal, which can include fixed fees for defined phases such as heads of terms review and data room setup, staged fees for due diligence and document negotiation, and capped fees for completion and post‑completion filings. We will always tell you in advance if changes in scope could affect fees and we keep you updated throughout.
Key documents and how they protect sellers
The share purchase agreement or asset purchase agreement records the commercial terms and risk allocation. The disclosure letter qualifies the warranties so that issues you have fairly disclosed cannot later give rise to a warranty claim. Ancillary documents can include service or consultancy agreements if you remain involved post‑sale, transitional services to maintain continuity, and assignments or novations to transfer contracts and intellectual property cleanly. We ensure each document is aligned to your strategy so your obligations are proportionate and time‑limited.
Employment and property considerations on a sale
Employees are central to continuity. In an asset sale, TUPE may transfer employees automatically to the buyer, with strict information and consultation duties and protections against dismissal. In a share sale, the employer stays the same but post‑completion changes still require care to avoid claims. On premises, buyers and lenders often require new leases, landlord consents or waivers of break rights. We coordinate these workstreams alongside the main deal to avoid last‑minute delays.
Banking, tax and third‑party consents
We work with your lenders to settle outstanding facilities and procure timely releases of debentures and charges, coordinating with the buyer’s funder to agree funds flow and completion deliverables. With your tax advisers we consider entrepreneur’s relief (business asset disposal relief), rollover and other reliefs to optimise your net outcome. Many key contracts include change‑of‑control or assignment restrictions; we map and secure the necessary consents early so your buyer sees a clear path to completion.
Frequently asked questions for sellers
When should I involve a selling a business solicitor?
Ideally before heads of terms are signed. Early advice can prevent value‑eroding provisions, shape the structure for tax and risk, and build a credible vendor due diligence pack that speeds up the process and reassures buyers.
What happens to my personal guarantees?
Personal guarantees do not fall away automatically on completion. We negotiate their release as a specific condition to completion and, where needed, arrange replacement security from the buyer so you are not exposed after you have exited.
How are confidential customer and pricing details protected?
We put in place robust non‑disclosure agreements, stage information releases, redact sensitive content where appropriate and restrict access to approved buyer representatives via a controlled data room with audit trails.
Will my contracts transfer automatically?
In a share sale, contracts usually remain in place because your company continues as the counterparty. In an asset sale, key agreements often require consent to assign or novate; we identify these early and manage the consent process to keep momentum.
What if my buyer is overseas?
Cross‑border buyers are common. We coordinate with local counsel on any foreign law documents, manage currency and payment mechanics, and ensure warranties, indemnities and enforcement provisions are practical across jurisdictions.
How we collaborate with your advisers
Strong transactions are team efforts. We work closely with your corporate finance adviser or broker on buyer engagement and valuation drivers, your accountant on normalised earnings and working capital analysis, and your tax specialist on reliefs and efficient structuring. This joined‑up approach minimises duplication, shortens diligence, and supports a united negotiating position.
Your next step
If you want a clear, controlled route to completion with a selling a business solicitor who understands how to protect value, the corporate team at Stephensons is ready to help you plan and deliver your sale on the right terms and timetable. Contact us today on 0161 696 6170 to speak with our specialist solicitors.
