How to Sell a Business in the UK?

Deciding that it’s time to sell your business is never an easy decision. Whether you’re retiring or seeking a new challenge, it can seem like a daunting process. Selling your business requires careful planning and an understanding that there are a series of processes involved, so patience is key!

This is where our selling your business services at Rayner Essex can make all the difference. Our expert team will get to know your business inside out and support you throughout the process.

How to sell your business in the UK 

A successful exit strategy, where you get the best valuation and a reliable buyer, takes plenty of work. Let’s explore how to sell your business in the UK, step by step:

Set your objectives and expectations 

You need to define exactly why you’re selling the business and what you expect from a buyer – before starting the process. Ask yourself the following question:

• Am I selling all or part of my business?
• Do I have a figure I’d happily sell it for? 
• What’s the lowest I could settle for?
• Do I want to continue to be involved in the business after selling?
• Do I want to be paid in full on completion or perhaps over a period of time?
• Do I want to secure the jobs of my team before I leave?

These questions will reveal exactly what your objectives and expectations are. Not only is this important for you to know, but also for potential buyers to understand. They’ll want to know why you’re selling your business, so articulating this clearly is key.

Prepare your business for sale by making it as attractive as possible 

For this, you’ll want to put yourself in the shoes of potential buyers and view your business from the outside. Consider the following:

• Do you have a loyal, growing customer base?
• Have your profits been increasing consistently?
• Are you a strong competitor in your market?
• Do you have the potential to expand? 

These are the most important factors that buyers will look at that can impact the value of your business. And here are some related ways to make your business more appealing:

• Demonstrate future growth and how this will be achieved
• Articulate your USPs
• Organise your business records, contracts, commercial agreements and other paperwork
• Ensure your accounts are up to date
• Resolve any disputes and issues
• Review your findings and optimise your performance

Research the tax you’ll need to pay 

When you decide to sell your business, it’s important to understand your tax obligations so that you aren’t hit with any nasty surprises. As tax rules and regulations are constantly changing, it’s worth speaking to a professional tax advisor to ensure you’re compliant and are fully utilising any opportunities. You may even qualify for tax reliefs, which will have an impact on any capital gains tax liability. The amount of tax you need to pay depends on the nature of the sale and what you are actually selling – Shares in your company or business assets?. 

Time the sale to secure the best deal 

It can be difficult to know when’s the right time to sell your business. However, there are some things to consider that will impact the amount you can sell the business for. 

Obviously, it’s a good idea to sell your business when profits are high, rather than falling, as this will attract high-paying buyers. Also, take a look at your industry, is it doing well and expanding? Then it might be time to sell as buyers will be searching for businesses like yours. Also, you should generally wait for your year-end figures before selling, to provide buyers with an accurate picture of your business.

Get a business valuation 

It’s important to get a business valuation as this is essentially the ‘asking price’ for your business, based on what it’s actually worth. Business valuations take into account your physical assets, projected profits, your brand’s reputation, customer base, your team and the industry. 

There’s no one-size-fits-all approach to business valuation, which is why it’s best to ask a professional for their business valuation services. This unbiased approach will offer the most accurate valuation of your business. Remember, this isn’t set in stone, so expect a lot of haggling with potential buyers to reach a price closest to the valuation.

Be prepared for due diligence 

Buyers want to ensure that they’re getting the best deal when purchasing a business. After all, it’s a big decision! So, be prepared for them to carry out due diligence by having everything in order and this will need to be verified prior to the sale being finalised.:

• Get financial documents in order, including copies of accounts, tax and VAT  returns 
• Make sure your accounting records and systems are accurate and up to date
• Ensure your Companies House registration is up to date
• Be clear about what properties and assets are included in the sale
• Be transparent about all liabilities 
• Make sure employee and client contracts are up to date 

Find a buyer 

Finding a buyer is your chance to market your business. You’ll want to create a detailed sale brochure that includes your USPs, financial data, growth potential, customer base and successes. 

Remember, some buyers can waste your time, so ensure you have a screening process set up to avoid discussions going nowhere and perhaps resulting in costly abortive fees.  

You’ll also want to stop word getting out before you’ve told your team, so make sure you have confidentiality agreements in place so that nothing can jeopardise your sale.

Be ready to negotiate a deal

It’s highly likely that your potential buyers will want to negotiate with you to get the best deal for them, i.e. a lower price. You should open these negotiations with multiple potential buyers, both to keep your options open and benefit from the added competition that can lead buyers to outbid one another and that will result in you achieving the highest sale price. 

This is where your initial objectives and expectations come into play. You should already have the lowest possible figure you’ll agree to in mind, to avoid any rash and regrettable decisions. Remember how appealing your business is and keep these points in mind when negotiating.

How can an M&A advisor help to sell my business?

You may not have much experience in business negotiations, and with so many considerations and complexities to consider when selling a business, you may benefit from getting advice. Here are some areas the M&A advisor will be able to assist you with to help you secure the best deal:

• Business planning
• Business valuation
• Preparing an information memorandum or sales brochure to market the business
• Researching, identifying and approaching potential buyers on your behalf
• Negotiating the sale with interested parties
• Securing a suitable offer and structuring the deal  
• Overseeing and managing the due diligence process
• Working with your solicitors to agree the terms and finalise the deal
• Provide you with further advice prior to and after completion

Your M&A advisor has a great depth of experience in all the above areas, and can help you to achieve the maximum sales value for your business and ensure that you’re making the right financial decisions for you and your business.

Carry out the sale by reviewing agreements

Once you’ve agreed on a sale price with a buyer, you’ll want to pass the reins over to your professional solicitor. t you with working with your solicitors to agree terms. The main agreement documents include: 

• Heads of Terms for the initial offer or deal
• Purchase and sale agreements that cover the terms of the sale for the business 
• Agreeing warranties and guarantees that will be included within the agreement
• Lender documents (only if the buyer is borrowing money to make the purchase)
• Lease agreements if office space is being rented
• Employment contracts for the transfer of staff to the new owner

What happens on the completion date? 

The completion date is a date agreed between the buyer and seller that the business transfers by law to the buyer. This is the date on which all documents are signed and the final completed paperwork is transferred. This is when you’ll also need to pay tax once the money has changed hands. 

How long does it take to sell a business? 

You won’t be surprised to hear that the answer to this question is: it depends. Every business is different and some are more complex than others. It also depends on the circumstances of both the buyer and the seller. Once the process has begun, it can take from three to six months, but sometimes it’s much longer. Patience is essential to getting the best deal – no business should be sold in a rush!

Selling your business is a huge decision and with so many different processes involved, it helps to have an expert team by your side. At Rayner Essex, our corporate services team have worked with all kinds of businesses of all sizes and appreciate your business is unique. Our M&A advisors are familiar with the sales cycle and the complexities of each stage of the process and have experience in business transactions. We take the time to understand your company and why you’re looking to sell, so we can find you the very best deal, eliminating stress and freeing up your time. Simply contact our corporate finance team today for a free initial consultation to discuss your specific business requirements.