Frequently
Asked Questions
1. Exit Planning & Timing
2. Business Valuation
3. The Sales Process
4. Deal Structure & Terminology
5. Tax & Employment at Sale
6. Critical & One-Off Situations
A business exit strategy is the plan for how and when you’ll eventually leave your business. Every owner exits at some point whether through sale, succession, or otherwise, and the outcome you get depends heavily on how much of that transition was planned versus forced by circumstance. Owners who put a strategy in place well ahead of time achieve an average uplift of 71% on their eventual sale price compared with those who don’t plan at all. That uplift is the reason it matters.
Most SME sales in the UK take between 6 and 18 months from bringing the business to market to completion, though this varies with sector, deal size and buyer appetite. The preparation stage beforehand (getting your financial records, contracts and management information in order) can add several more months, but it’s this preparation that most affects both the final price and how smoothly the process runs. Businesses that come to market well-prepared consistently sell faster than those that don’t.
Most owners first need a valuation ahead of a sale, but it comes up in several other situations too:
- One shareholder buying out another, often due to ill health or retirement
- Confirming appropriate levels of Keyman or other business insurance
- Benchmarking business performance before and after significant changes, such as restructuring or rapid growth
- Gifting shares to key employees or family members
- A Management Buy Out (MBO) or Management Buy In (MBI)
- Transferring ownership to an Employee Ownership Trust (EOT)
- Other circumstances such as divorce, probate or incapacity
There are several recognised valuation methods, but for most exit planning and business sale purposes, a multiple of profits is the standard approach. Some sectors use different techniques, high-growth SaaS businesses, for example, are sometimes valued on turnover or recurring revenue instead.
Not accurately. Turnover only tells part of the story. Buyers ultimately pay for profit, not sales volume. We’ve written a full explanation of why turnover-based valuation falls short: How do you value a business based on turnover?
Sector averages exist, but treat them as a rough guide rather than a prediction. An “average” blends the best-performing businesses with the worst, and micro-businesses with multinationals. Averages can’t tell you what your business specifically will fetch. Ultimately, buyers set the multiple they’re willing to pay. Our role is to identify the factors in your business that push that multiple up, and the ones dragging it down.
To begin, we ask for a simple list: financial accounts, details of any business premises, and what’s prompting the need for a valuation, followed by a 30-minute conversation about the business. We combine that with our own research into current market conditions and buyer trends to arrive at a figure.
It depends on the complexity of your business and sector, but we can generally turn a valuation around within a week.
In most cases, value is driven by profitability, so growing turnover and net profit both help. But buyers also price in risk, which is why we use the Value Builder™ methodology – a framework built around the eight key drivers of business value, used to identify which levers will actually move your multiple. You can calculate your own Value Builder Score™ for free here: Get your Value Builder Score
No, you can run a sale yourself if you have the time and appetite for it. What a good broker adds is confidentiality, experience in marketing, negotiation and deal structuring, and a buffer between you and the flow of enquiries, so you can keep running the business while the sale progresses. Trying to do both at once is where owners most often lose value, either the sale drags, or day-to-day performance slips. A broker’s vetting process also filters out curious “window shoppers” before they ever reach you.
Yes, almost always, and it’s worth looking beyond direct trade buyers. Buyer appetite also shifts with the economic cycle: in stronger markets, buyers will take on a business that doesn’t tick every box, on the belief they can improve it. In more cautious periods, buyers narrow their focus to the strongest opportunities and scrutinise everything else more closely. Buyers exist in every sector. Your job, with our help, is to make sure your business leaves no doubt that it’s a good purchase.
We understand that confidentiality from employees, customers, suppliers and competitors is essential for most sellers. Once we understand your specific concerns, we use a combination of tools and process controls (including NDAs, blind profiles and controlled information release) to protect your business throughout the sale.
An NDA is a legal agreement that a prospective buyer signs before they see any identifiable information about your business. It’s the first line of defence in keeping a sale confidential, and no serious buyer should expect to see financial or operational detail without signing one first.
Business sales increasingly run through online portals, the largest being Business Partnership, BusinessesForSale and Daltons Business. We also have access to more specialist portals used by serious acquirers and their advisors. Alongside this, we build targeted outbound marketing lists from company data sources and use social media and our wider business network to reach buyers who aren’t actively browsing listings.
In a share sale, the buyer purchases the shares in your company, taking on the business exactly as it stands, including its contracts, liabilities and history. In an asset sale, the buyer purchases specific assets (equipment, contracts, goodwill, stock) rather than the company itself, and the existing company (along with any liabilities left behind) stays with you. Share sales are more common for incorporated owner-managed business sales and are usually more tax-efficient for sellers; asset sales are more common where a buyer wants to cherry-pick what they take on, or where there are liabilities they want to avoid inheriting.
A CIM — also called an Information Memorandum (IM) or Sales Particulars, is a document prepared to generate buyer interest. It presents the business in its best possible light, gives buyers the information they need to form an offer, and becomes the starting point for due diligence once a deal moves forward.
Due diligence is the investigation a buyer carries out to verify the facts of a business before completing a purchase. It typically covers three areas: financial (the company’s accounts and financial records), legal (everything from property leases and employment contracts to the Memorandum and Articles of Association, insurance and environmental matters), and commercial (the market the business operates in, and whether there are risks around customers, product or suppliers). It’s the buyer’s opportunity to fully understand the opportunity and its risks before signing a binding contract.
Heads of Terms (HOT), also called Heads of Agreement (HOA) or, in the increasingly common American phrasing, a Letter of Intent (LOI), sets out the commercial terms of a deal that’s been agreed in principle, subject to due diligence. It’s only legally binding in specific respects (typically confidentiality, exclusivity and cost allocation), but it forms the basis solicitors use to draft the final sale contract, and shouldn’t change materially unless something significant emerges during due diligence.
An earn-out is a pricing structure where part of the sale price is contingent on how the business performs after completion. Rather than being paid entirely on day one, the seller “earns” that portion of the price based on agreed post-sale targets, which means the seller carries some risk (and potential upside) tied to performance they may no longer fully control.
Deferred consideration is the part of the purchase price paid after completion, on agreed future dates, but unlike an earn-out, it isn’t conditional on the business’s performance after the sale. Be aware that some buyers use “deferred consideration” and “earn-out” loosely, or interchangeably, to make an offer sound stronger than the underlying terms actually are. Always clarify exactly which structure, and which conditions, you’re being offered. See also vendor financing below.
Vendor financing is where the seller effectively lends part of the purchase price to the buyer – another form of deferred consideration. It’s common in Management Buy Outs (MBOs), where buyer and seller already know and trust each other, and in Leveraged Buy Outs (LBOs), where the buyer typically doesn’t. LBOs carry meaningfully more risk for the seller, since repayment depends on a buyer you may not know well continuing to perform . Take professional advice before agreeing to vendor finance in an LBO, or any structure.
EBIT (Earnings Before Interest and Tax) is a measure of a company’s profitability calculated as revenue minus operating expenses, before the impact of interest and tax.
EBITDA (Earnings Before Interest, Tax, Depreciation and Amortisation) is one of the most widely used measures of profitability in business sales, because it strips out financing structure, tax position and accounting policy to give a cleaner comparison between businesses. Buyers and advisors will often also look at adjusted EBITDA, which “normalises” the figure further by adding back one-off costs or owner-specific expenses that wouldn’t apply under new ownership. These are commonly called add-backs.
SDE is a profitability measure used mainly in North America to capture the true financial benefit a business generates for its owner, normalising profit so it can be fairly compared against similarly owner-run businesses. In the UK, adjusted EBIT or adjusted EBITDA serve the equivalent purpose.
Most sellers pay Capital Gains Tax (CGT) on the profit from selling their business, though the rate depends on your circumstances. If you qualify for BADR, you pay a reduced rate on gains up to a £1 million lifetime limit (currently 18% from 6 April 2026) against a standard CGT rate of 24%. Qualifying for BADR depends on factors like how long you’ve owned the business and your shareholding, and the rules and rates have changed several times in recent years, so this is an area where the right advice, taken early, can materially affect what proceeds of sale you keep. We’re not tax advisors ourselves, so always take advice specific to your situation before making decisions based on rate changes.
In most UK business sales, employees are protected by TUPE (Transfer of Undertakings (Protection of Employment)) regulations, which mean they transfer to the new owner on their existing terms and conditions. The business sale itself isn’t grounds for dismissal or worsening their terms. TUPE applies differently depending on whether the deal is structured as a share sale or an asset sale, so it’s worth understanding early, both to plan the transition properly and because how you handle it affects how the deal looks to a buyer.
Thinking through this now, as part of exit planning, can prevent family disputes and costly legal bills later. A business dispute is the last thing you want to leave behind for a grieving family. This means putting the right legal documentation and policies in place in advance (which need to cover ownership, succession and decision-making) rather than leaving your family to work it out during one of the hardest periods of their lives.
Incapacity is more common than most owners plan for, and unlike death, it can happen suddenly and temporarily, leaving no clear decision-maker in place while you recover. A Lasting Power of Attorney covering business decisions, a clear succession or delegation plan, and up-to-date Keyman insurance are the core protections most owner-managed businesses lack. Building these in alongside your exit strategy means the business, and your family, aren’t left exposed if the unexpected happens.
1. Exit Planning & Timing
2. Business Valuation
3. The Sales Process
4. Deal Structure & Terminology
5. Tax & Employment at Sale
6. Critical & One-Off Situations
A business exit strategy is the plan for how and when you’ll eventually leave your business. Every owner exits at some point whether through sale, succession, or otherwise, and the outcome you get depends heavily on how much of that transition was planned versus forced by circumstance. Owners who put a strategy in place well ahead of time achieve an average uplift of 71% on their eventual sale price compared with those who don’t plan at all. That uplift is the reason it matters.
Most SME sales in the UK take between 6 and 18 months from bringing the business to market to completion, though this varies with sector, deal size and buyer appetite. The preparation stage beforehand (getting your financial records, contracts and management information in order) can add several more months, but it’s this preparation that most affects both the final price and how smoothly the process runs. Businesses that come to market well-prepared consistently sell faster than those that don’t.
Most owners first need a valuation ahead of a sale, but it comes up in several other situations too:
- One shareholder buying out another, often due to ill health or retirement
- Confirming appropriate levels of Keyman or other business insurance
- Benchmarking business performance before and after significant changes, such as restructuring or rapid growth
- Gifting shares to key employees or family members
- A Management Buy Out (MBO) or Management Buy In (MBI)
- Transferring ownership to an Employee Ownership Trust (EOT)
- Other circumstances such as divorce, probate or incapacity
There are several recognised valuation methods, but for most exit planning and business sale purposes, a multiple of profits is the standard approach. Some sectors use different techniques, high-growth SaaS businesses, for example, are sometimes valued on turnover or recurring revenue instead.
Not accurately. Turnover only tells part of the story. Buyers ultimately pay for profit, not sales volume. We’ve written a full explanation of why turnover-based valuation falls short: How do you value a business based on turnover?
Sector averages exist, but treat them as a rough guide rather than a prediction. An “average” blends the best-performing businesses with the worst, and micro-businesses with multinationals. Averages can’t tell you what your business specifically will fetch. Ultimately, buyers set the multiple they’re willing to pay. Our role is to identify the factors in your business that push that multiple up, and the ones dragging it down.
To begin, we ask for a simple list: financial accounts, details of any business premises, and what’s prompting the need for a valuation, followed by a 30-minute conversation about the business. We combine that with our own research into current market conditions and buyer trends to arrive at a figure.
It depends on the complexity of your business and sector, but we can generally turn a valuation around within a week.
In most cases, value is driven by profitability, so growing turnover and net profit both help. But buyers also price in risk, which is why we use the Value Builder™ methodology – a framework built around the eight key drivers of business value, used to identify which levers will actually move your multiple. You can calculate your own Value Builder Score™ for free here: Get your Value Builder Score
No, you can run a sale yourself if you have the time and appetite for it. What a good broker adds is confidentiality, experience in marketing, negotiation and deal structuring, and a buffer between you and the flow of enquiries, so you can keep running the business while the sale progresses. Trying to do both at once is where owners most often lose value, either the sale drags, or day-to-day performance slips. A broker’s vetting process also filters out curious “window shoppers” before they ever reach you.
Yes, almost always, and it’s worth looking beyond direct trade buyers. Buyer appetite also shifts with the economic cycle: in stronger markets, buyers will take on a business that doesn’t tick every box, on the belief they can improve it. In more cautious periods, buyers narrow their focus to the strongest opportunities and scrutinise everything else more closely. Buyers exist in every sector. Your job, with our help, is to make sure your business leaves no doubt that it’s a good purchase.
We understand that confidentiality from employees, customers, suppliers and competitors is essential for most sellers. Once we understand your specific concerns, we use a combination of tools and process controls (including NDAs, blind profiles and controlled information release) to protect your business throughout the sale.
An NDA is a legal agreement that a prospective buyer signs before they see any identifiable information about your business. It’s the first line of defence in keeping a sale confidential, and no serious buyer should expect to see financial or operational detail without signing one first.
Business sales increasingly run through online portals, the largest being Business Partnership, BusinessesForSale and Daltons Business. We also have access to more specialist portals used by serious acquirers and their advisors. Alongside this, we build targeted outbound marketing lists from company data sources and use social media and our wider business network to reach buyers who aren’t actively browsing listings.
In a share sale, the buyer purchases the shares in your company, taking on the business exactly as it stands, including its contracts, liabilities and history. In an asset sale, the buyer purchases specific assets (equipment, contracts, goodwill, stock) rather than the company itself, and the existing company (along with any liabilities left behind) stays with you. Share sales are more common for incorporated owner-managed business sales and are usually more tax-efficient for sellers; asset sales are more common where a buyer wants to cherry-pick what they take on, or where there are liabilities they want to avoid inheriting.
A CIM — also called an Information Memorandum (IM) or Sales Particulars, is a document prepared to generate buyer interest. It presents the business in its best possible light, gives buyers the information they need to form an offer, and becomes the starting point for due diligence once a deal moves forward.
Due diligence is the investigation a buyer carries out to verify the facts of a business before completing a purchase. It typically covers three areas: financial (the company’s accounts and financial records), legal (everything from property leases and employment contracts to the Memorandum and Articles of Association, insurance and environmental matters), and commercial (the market the business operates in, and whether there are risks around customers, product or suppliers). It’s the buyer’s opportunity to fully understand the opportunity and its risks before signing a binding contract.
Heads of Terms (HOT), also called Heads of Agreement (HOA) or, in the increasingly common American phrasing, a Letter of Intent (LOI), sets out the commercial terms of a deal that’s been agreed in principle, subject to due diligence. It’s only legally binding in specific respects (typically confidentiality, exclusivity and cost allocation), but it forms the basis solicitors use to draft the final sale contract, and shouldn’t change materially unless something significant emerges during due diligence.
An earn-out is a pricing structure where part of the sale price is contingent on how the business performs after completion. Rather than being paid entirely on day one, the seller “earns” that portion of the price based on agreed post-sale targets, which means the seller carries some risk (and potential upside) tied to performance they may no longer fully control.
Deferred consideration is the part of the purchase price paid after completion, on agreed future dates, but unlike an earn-out, it isn’t conditional on the business’s performance after the sale. Be aware that some buyers use “deferred consideration” and “earn-out” loosely, or interchangeably, to make an offer sound stronger than the underlying terms actually are. Always clarify exactly which structure, and which conditions, you’re being offered. See also vendor financing below.
Vendor financing is where the seller effectively lends part of the purchase price to the buyer – another form of deferred consideration. It’s common in Management Buy Outs (MBOs), where buyer and seller already know and trust each other, and in Leveraged Buy Outs (LBOs), where the buyer typically doesn’t. LBOs carry meaningfully more risk for the seller, since repayment depends on a buyer you may not know well continuing to perform . Take professional advice before agreeing to vendor finance in an LBO, or any structure.
EBIT (Earnings Before Interest and Tax) is a measure of a company’s profitability calculated as revenue minus operating expenses, before the impact of interest and tax.
EBITDA (Earnings Before Interest, Tax, Depreciation and Amortisation) is one of the most widely used measures of profitability in business sales, because it strips out financing structure, tax position and accounting policy to give a cleaner comparison between businesses. Buyers and advisors will often also look at adjusted EBITDA, which “normalises” the figure further by adding back one-off costs or owner-specific expenses that wouldn’t apply under new ownership. These are commonly called add-backs.
SDE is a profitability measure used mainly in North America to capture the true financial benefit a business generates for its owner, normalising profit so it can be fairly compared against similarly owner-run businesses. In the UK, adjusted EBIT or adjusted EBITDA serve the equivalent purpose.
Most sellers pay Capital Gains Tax (CGT) on the profit from selling their business, though the rate depends on your circumstances. If you qualify for BADR, you pay a reduced rate on gains up to a £1 million lifetime limit (currently 18% from 6 April 2026) against a standard CGT rate of 24%. Qualifying for BADR depends on factors like how long you’ve owned the business and your shareholding, and the rules and rates have changed several times in recent years, so this is an area where the right advice, taken early, can materially affect what proceeds of sale you keep. We’re not tax advisors ourselves, so always take advice specific to your situation before making decisions based on rate changes.
In most UK business sales, employees are protected by TUPE (Transfer of Undertakings (Protection of Employment)) regulations, which mean they transfer to the new owner on their existing terms and conditions. The business sale itself isn’t grounds for dismissal or worsening their terms. TUPE applies differently depending on whether the deal is structured as a share sale or an asset sale, so it’s worth understanding early, both to plan the transition properly and because how you handle it affects how the deal looks to a buyer.
Thinking through this now, as part of exit planning, can prevent family disputes and costly legal bills later. A business dispute is the last thing you want to leave behind for a grieving family. This means putting the right legal documentation and policies in place in advance (which need to cover ownership, succession and decision-making) rather than leaving your family to work it out during one of the hardest periods of their lives.
Incapacity is more common than most owners plan for, and unlike death, it can happen suddenly and temporarily, leaving no clear decision-maker in place while you recover. A Lasting Power of Attorney covering business decisions, a clear succession or delegation plan, and up-to-date Keyman insurance are the core protections most owner-managed businesses lack. Building these in alongside your exit strategy means the business, and your family, aren’t left exposed if the unexpected happens.