Planning to sell or exit your small business

For many small business owners, building a company is the product of years – sometimes decades – of hard work, long hours and personal sacrifice. But what happens when it's time to move on?

Perhaps you're eyeing retirement, feeling burned out or simply ready for a new chapter? Whatever your motivation, planning your exit from the business is one of the most important decisions you'll ever make.

Many business owners leave this step too late, risking a rushed sale, a lower valuation or unnecessary stress. Yet with proper planning, you can get the highest possible value out of your business, make sure the transition is smooth and exit on your own terms.

In this guide, we explore everything you need to know to plan your business exit – from choosing the right time to sell, to understanding valuations, finding buyers, navigating legal and tax considerations, and preparing for life after the sale.

1. Why exit planning matters

When you're in the thick of running a small business, your focus is firmly on the day-to-day. As such, you don't have much of an opportunity to think about the endgame.

But truthfully, the best exits don't happen by accident – they're designed. And the sooner you start thinking about yours, the more options you'll have and the better the outcome will be. Here's why exit planning is essential.

Avoiding a forced sale

In life, anything can happen. You might suffer an illness, have family issues or reach a place where you feel burned out and unable to carry on. Any of these situations – and many others –can force you into having to leave the business suddenly.

As a result, having a clear exit strategy in place protects your business – and its value – if you ever need to step back unexpectedly.

Preserving your business's value

Buyers will show a willingness to pay more for a business they can see is well run. This includes having clean finances, processes that are properly documented and strong potential for the future.

Exit planning gives you the time to polish your business and fix anything that might deter a buyer, before going to market.

Attracting a suitable buyer

The best buyer isn't always the first one to make you an offer. By preparing well ahead of time, you can make sure you're marketing your business to the right type of buyer – someone who sees the long-term value and is willing to pay for it.

Allowing for a smooth handover and continuity

When you have staff, clients or long-standing relationships with suppliers, a properly planned exit will make sure the transition happens smoothly.

You'll be able to hand over with confidence, knowing your business can carry on successfully without you.

Getting your legal affairs and taxes in order

There's much more to selling a business than simply agreeing a price. Tax planning, legal structures and timing can have a marked effect on the amount of money you walk away with.

Planning ahead gives your advisers the opportunity to structure the deal in your best interests.

2. Timing your exit

One question that occupies any business owner looking to sell up is "When is the right time to do it?"

The answer depends on a combination of personal aims, how the business is performing and the conditions playing out in the current market.

But giving yourself plenty of time to prepare is key to being able to exit your business successfully.

Start planning early

Ideally, you should begin considering your exit at least one to three years in advance.

This forward-thinking lets you improve your financial situation, streamline how the business runs and get it to a place where it can attract maximum value.

A well-prepared business not only commands a better price but also sells faster.

Consider market conditions

Unfortunately, not all factors are within your control, and whatever is happening in the market at the time you come to sell will have an effect on how attractive potential buyers find your business.

If the economy is booming, your industry is growing or there's simply strong demand for businesses like yours, the valuation can shoot up. Conversely, political uncertainty or a recession may make buyers more prudent.

Keeping in step with the market – either through a broker or an accountant, or simply by watching what similar businesses are doing – can help you decide when to strike.

Think about seasonality

Depending on the sector you operate in, the timing of your exit can matter. For example:

• a retail business may look stronger after the Christmas trading period

• hospitality businesses might be more attractive just after peak season, when bookings and cash flow are at their strongest

• accountancy firms often sell in the summer, outside of the January tax return rush

Try to present your business when performance is peaking and there's little risk for buyers to worry about.

Make sure you're meeting your personal goals

Finally, the time you come to sell your business should fit comfortably with your home and personal life.

• Are you ready to retire?

• Do you want to move abroad?

• Are you thinking of launching a new venture?

The ideal exit is one that not only suits you financially but matches your personal plans and wellbeing. Don't wait until you're desperate to leave. The best exits are proactive, not reactive.

3. Valuing your business

Knowing what your business is worth is one of the first – and most crucial – steps in your path towards an eventual exit.

Set the price too low and you could be selling yourself short. Too high, and you risk scaring off serious buyers.

A realistic valuation supported by hard financial data will not only draw interest but give you a stronger position from which to negotiate.

How business valuation works

There isn't a one-size-fits-all formula to valuing a business, but here are some typical methods used in the UK:

Earnings multiples

Often used to value businesses that are well established and generate plenty of profit.

It involves applying a multiple (usually between 2x and 5x) to your business's annual profits (often EBITDA – Earnings Before Interest, Tax, Depreciation and Amortisation).

The multiple depends on your sector, prospects for growth and any perceived risk.

Asset-based valuation

More relevant for businesses with lots of physical assets (like manufacturers or property companies, for example). It looks at the value of these assets (such as equipment, stock or property) minus liabilities.

Discounted cash flow (DCF)

A more complicated method that values the business based on the cash flow it expects to have in the future, adjusted for risk. It's commonly used for larger businesses or when there's a need to forecast future performance.

Industry rule-of-thumb

Some sectors have standard pricing benchmarks – like a multiple of turnover or number of customers. These differ from industry to industry and are usually best used alongside other methods.

What buyers want

Serious buyers aren't solely interested in the figures, but want to see potential as well. Here's a list of things that they'll also find valuable:

• Sustainable profits – more than just one good year

• Recurring revenue – like subscriptions or contracts, for example

• A loyal customer base – particularly if you're not overly reliant on a few key clients

• Strong brand and reputation

• Low dependence on you – businesses that can run without the owner are more attractive and sellable

When to get a professional valuation

You might want to consider getting an independent, professional valuation if you:

• are serious about selling within the next 12 to 24 months

• are planning your exit and want to establish a benchmark for your business's value

• aren't sure how your business compares to others in your industry

Many accountants, business brokers and M&A (mergers and acquisitions) advisers in the UK offer valuation services – some even waive a fee if you go on to sell through them. Just make sure the valuation is arrived at using a sound method and tailored to your specific type of business.

VIDEO: How to value your business

Chartered accountant and business adviser Sean Hackemann explains the underlying methods and concepts of business valuations for small businesses:

4. Getting the business ready for sale

A clean and organised business is easier to sell – but it'll also be worth more. Think of the preparation phase as staging your business for sale, much like tidying a house before putting it on the market.

Your aim is to make an excellent first impression, show the buyer there's little risk in the purchase and demonstrate that your business runs smoothly with or without you.

Here are some areas to focus on.

Financial housekeeping

Buyers want to see detailed, accurate figures and documentation. That means the following:

• Up-to-date accounts: At least three years of trading history, ideally with strong and steady profits.

• Clear records: Clean bookkeeping, reconciled bank accounts and well-organised invoices and receipts.

• Realistic forecasts: Backed by data, not wishful thinking.

• No skeletons in the closet: Clear up unpaid tax, overdue debts or legal disputes before going to market.

If your accounts are a bit messy or you're behind with your filing, now's the time to work with your accountant and get things in order.

Tidying up operations

The less your business is forced to rely on you, the more it'll appeal to buyers. You can start by doing these three things:

• Documenting processes: Create systems and manuals for day-to-day tasks, customer service, sales and so on.

• Delegating effectively: Make sure staff can handle running the business without constant input from you.

• Strengthening the team: Buyers will feel more confident if there's a capable team of staff in place.

A business that can "run itself" adds serious value.

Legal checks

Don't let minor admin be the sticking point that stops you selling up. Make sure:

• contracts are in place – for employees, suppliers and customers

• licences and permissions are valid and up to date

• GDPR and data protection rules are being followed

• IP is protected – if your brand, logo or content is important to the business, register trademarks or copyrights where you need to

Buyers will do their own due diligence – beat them to it by getting ahead of any potential problems.

Relationships with customer and suppliers

Buyers put a lot of stock in consistency and stability. They'll ask you questions like:

• Are key clients under contract or is there a risk they'll leave?

• Can you rely on your suppliers?

• What happens if a major customer pulls out?

If you have strong, long-standing relationships, showcase them. If not, look at ways to shore up or diversify your customer base.

5. Who might buy your business?

You might be surprised by how many different types of buyers show interest in your business. Each comes with their own motivations, advantages and challenges.

Understanding who your ideal buyer is will help you market your business more effectively – and negotiate a deal that works for you.

Here are the main types of buyer to think about.

Internal buyers

These are people already involved in the business:

• Employees or managers: They already understand how the business runs and often care about its long-term success. A management buyout (MBO) can be a smooth exit with little disruption.

• Family members: Passing the business to children or relatives can preserve your legacy. But clearly agree roles, expectations and succession planning upfront to avoid conflict later.

Pros: Continuity, smoother handover, often faster process

Cons: May need help securing funding, can blur personal and professional lines

Outside buyers

These are third-party people or companies:

• Competitors or trade buyers: Often looking to expand market share, enter new regions or add to their services. They may pay a premium for strategic value.

• Entrepreneurs: Individuals looking for a ready-made business rather than starting from scratch.

• Private investors or small private equity firms: Typically interested in growth potential and future returns.

Pros: Potential for higher valuation, fresh energy and investment

Cons: Might make staff nervous, longer due diligence process

Business brokers and marketplaces

You can list your business on specialist platforms like:

• BusinessesForSale.com

• Daltons Business

• RightBiz

Or, you can work with a business broker who actively finds and vets buyers for you.

Pros: Wider reach, professional support, discreet marketing

Cons: Broker fees, not all platforms are equally effective

Franchisors or franchisees (if this applies)

If you run a franchise, your franchisor may want to help you find a new operator – or a fellow franchisee may want to expand.

Make sure you understand the terms of your franchise agreement when preparing to sell.

Tip: Think carefully about what matters most to you – maximum sale price, speed, legacy, staff welfare – and use that to help guide the type of buyer you're aiming for.

6. Marketing your business for sale

Once your business is ready and you've settled on your ideal buyer, it's time to put it out into the world.

But selling a business is different to selling a product – you need to balance visibility with confidentiality, professionalism with persuasion.

Here's how to market your business the right way.

Create a solid sales pack (information memorandum)

This is your shop window. A professional sales pack – also known as an information memorandum – summarises everything a potential buyer needs to know to take interest. It should include:

• a compelling overview of the business

• key financials and performance highlights

• relationships with customers and suppliers

• operational structure and team

• opportunities for growth

• your reason for selling

The goal is to present your business as an attractive, well-run opportunity – without giving away anything too sensitive upfront.

Protect confidential information

Many business owners worry about word getting out to staff, customers or competitors. To protect your business:

• use non-disclosure agreements (NDAs) before sharing detailed financials or specifics about the business

• limit early information to high-level summaries until you've qualified a buyer

• work with a broker if you need discreet marketing – some specialise in confidential sales

Buyers respect professionalism, and NDAs are a standard part of the process.

Choose where to list or promote

Depending on your type of business, sector and size, you have a few options:

• Online marketplaces: Like BusinessesForSale.com, RightBiz, and Daltons Business (as mentioned in section 5) – ideal for small to mid-sized businesses.

• Business brokers: They'll help you prepare documents, vet potential buyers and handle negotiations – often for a success-based fee.

• Accountants or solicitors: Many professionals have networks or connections with potential buyers.

• Direct outreach: For strategic buyers (like competitors or suppliers), you may want to approach them directly or through a broker.

Highlight the right selling points

Tailor your messaging to what buyers care about. Some may value recurring income, while others want untapped potential.

Here are some examples:

• "Established for over 10 years with loyal customer base"

• "Strong profits and low overheads"

• "Huge growth potential in an untapped local market"

• "Fully ready to scale"

If your business has unique assets – like a recognisable brand, proprietary systems or a strong online presence – be sure to feature them.

Done right, marketing your business is about more than exposure – it's about finding the right buyer, who sees the true value in what you've built.

7. Negotiating and closing the deal

Once you've attracted a serious buyer, the real work begins. Selling your business involves more than agreeing a price – it's a detailed process with several steps, documents and professionals involved.

Knowing what to expect will help you stay in control, protect your interests and keep the deal moving forward.

Offers and heads of terms

When a buyer is ready to move forward, they'll typically submit an offer – often in the form of heads of terms (HoT).

This is a non-binding document that outlines the key points of the deal, including:

• the purchase price

• how the deal is structured (full sale, staged payments, earn-out and so on)

• the timeline for completion

• any conditions (such as due diligence or financing)

While not legally binding, the HoT sets the tone for negotiations and is a key milestone in the process.

Due diligence

Once an agreement in principle is in place, the buyer will carry out due diligence.

This is their opportunity to verify everything they've been told about your business – financials, operations, legal matters, contracts and risks.

To prepare for this stage:

• have your financials, tax filings and contracts ready to share

• be transparent – hiding issues can derail trust and delay the deal

• keep communication open and timely

Buyers may bring in accountants, solicitors or consultants to help with their reviewing.

Deal structures

Not every sale is a simple lump-sum payment. Common deal structures in the UK include the following:

• Full sale (outright purchase): You receive the full amount when the sale is complete.

• Earn-out: Part of the price is paid based on the business hitting certain targets after the sale.

• Deferred payments: Some of the payment is spread out over time.

• Phased handover: You stay on for a period (for example, six to 12 months) to help transition the business.

Each has pros and cons – especially around control, risk and tax – so it's important to get advice before agreeing.

Legal agreements

Once due diligence is complete and terms are agreed, your solicitor will draft the final sale and purchase agreement (SPA).

This legally binding contract details everything: price, payment terms, warranties, liabilities, handover arrangements and more.

At this stage:

• your solicitor and accountant will play key roles – make sure they have experience in selling businesses

• expect back-and-forth negotiation on the finer points

• don't be afraid to push for terms that protect you, especially around warranties and liabilities

Completion day

Once everything is agreed and signed, the deal completes – and ownership transfers to the buyer.

You'll receive your funds (or the first instalment), and depending on the deal, may begin a handover or advisory period.

It's a huge moment. Make sure you take a minute to reflect – you've just completed one of the biggest milestones in your life as an entrepreneur.

8. Tax planning and legal considerations

Selling your business isn't just a commercial decision – it's a personal financial event.

How the deal is structured can make a huge difference to how much money you actually walk away with.

And in the UK, there are specific tax rules and legal requirements you'll need to navigate. Here's what you need to know.

Capital Gains Tax

In most cases, the profit you make from selling your business will be subject to Capital Gains Tax (CGT). But fortunately there are reliefs available that can significantly reduce your bill.

Business Asset Disposal Relief (formerly Entrepreneurs' Relief) is one such example. This allows you to pay just 10% CGT on the first £1 million of lifetime gains when you sell all or part of your business.

To qualify, you generally must:

• be a sole trader, a business partner or own at least 5% of shares and voting rights

• have owned the business (or shares) for at least two years

• be an officer or employee of the company (if it's a limited company)

Speak to your accountant early to make sure you qualify. And don't make assumptions based on past rules, as the criteria can change.

Structuring the deal tax-efficiently

How the deal is set up can have an impact on how much tax you must pay. For example:

• a share sale (selling shares of a limited company) may be more tax-efficient than an asset sale

• spreading payments over several tax years might help with allowances

• selling as part of a retirement plan may allow you to make pension contributions before or after the sale

A tax adviser can help you model different scenarios and plan ahead.

Legal responsibilities and liabilities

Before and after the sale, you may be responsible for the following:

• Warranties and indemnities: These are promises about the state of the business. If something goes wrong after the sale and you didn't disclose it, you could be liable.

• Keeping to employment law: If staff are being transferred to a new owner, the TUPE regulations (Transfer of Undertakings Protection of Employment) may apply.

• Contracts and property: Lease agreements, client contracts, supplier deals – all need to be reviewed, transferred or terminated properly.

Don't rely on generic templates or verbal agreements – this is where a good solicitor is worth every penny.

HMRC notifications and paperwork

Depending on your business structure, you may need to:

• deregister for VAT or Pay As You Earn (PAYE)

• inform HMRC that the business has closed or been sold

• submit final tax returns and pay any amounts you owe

Your accountant can help make sure all the right boxes are ticked.

Tip: Planning for tax and legal issues early – ideally six to 12 months before you sell – can help you avoid nasty surprises and keep more of what you've earned.

9. After the sale – what's next?

You've handed over the keys, the funds are in your account and the business you built is now in someone else's hands. So… what now?

Life after selling your business can be both exciting and uncertain. Whether you're retiring, reinvesting or just taking a well-earned break, it's worth thinking ahead about what comes next – both practically and emotionally.

Transition period and handover

Many deals include a handover period – often a few weeks or months – where you remain available to support the new owner. This could involve:

• introducing key clients or suppliers

• training the buyer or new management team

• answering questions and resolving teething issues

Some sellers choose to stay on in a consultancy or advisory role, either for a fixed period or part-time. This can ease the transition while still giving you space to step back.

The emotional side of letting go

For many business owners, selling can feel like losing a part of their identity. It's perfectly normal to experience a mix of relief, pride and even sadness.

Here are some tips for handling the emotional side.

• Take some time off – it's perfectly fine to pause and reflect.

• Talk to other business owners who've gone through it.

• Set some personal goals for the next chapter.

If your business was a big part of your life, it's worth thinking about how to stay fulfilled once it's gone.

What to do with the proceeds

Once the dust settles, you'll want to think carefully about how to use or invest the money from the sale. Here are some common next steps:

• Investing: In property, shares or another business

• Pensions: Boosting your retirement pot

• Gifting or inheritance planning: Passing on wealth tax-efficiently

• Savings or spending: Enjoying the fruits of your labour!

Speaking to a financial planner after the sale can help you make informed decisions and protect your wealth for the long term.

Start something new (or don't!)

Some sellers go on to:

• start a new business (often in a different industry)

• become an investor or mentor to other entrepreneurs

• volunteer, travel or spend more time with family

Others simply enjoy a well-earned retirement. Whatever your next move is, having a plan will help you feel confident and in control of this next phase.

Remember: Selling your business isn't the end of the story – it's the start of a brand-new chapter. The freedom you've worked so hard for is finally here. Enjoy it.

10. Getting the right advice

Selling a business is one of the most complex – and important – financial decisions you'll ever make. Having the right people in your corner makes all the difference.

Here's who you'll likely need on your team.

Accountant

An experienced accountant can:

• help you prepare clean, buyer-ready financials

• advise on the business's valuation and how to structure the deal

• reduce your tax liability as much as possible

• assist with your obligations to HMRC once you've sold up

Solicitor

Your solicitor will:

• draft and negotiate the legal documents (like the sale and purchase agreement)

• help you understand warranties, indemnities and liabilities

• make sure contracts, leases, and employee matters are properly transferred

Choose a solicitor who has handled business sales before – preferably in your size and sector.

Business broker or adviser

If you're not selling to someone you already know (like staff or family), a broker or M&A (mergers and acquisitions) adviser can:

• value and market your business

• find and vet potential buyers

• handle confidentiality and negotiations

• help you stay emotionally detached during tough conversations

Financial planner

After the sale, a financial adviser can help you:

• plan for retirement or reinvestment

• manage the proceeds wisely

• protect your assets and reduce your long-term exposure to tax

Don't wait until the sale is done – talking to a planner early can help shape your goals and priorities before the money lands in your account.

Final thoughts

Selling or exiting your business is a big decision – but with the right preparation, it can also be a hugely rewarding one.

Whether you're stepping back for retirement, chasing a new opportunity or simply ready for a change, planning ahead will help you get the best value, avoid costly mistakes and make the process as smooth as possible.

Start by getting your business into shape, understanding its true value and surrounding yourself with professionals who've been there before.

Even if you're not planning to sell tomorrow, laying the groundwork now means you'll be ready whenever the time is right.

Your exit should be on your terms – strategic, profitable and stress-free. You've built something great. Now it's time to finish strong.

Relevant resources

• How to value a business in the UK: All you need to know

• Lunch and Learn: My two successful exits and what I look for in investments

• WEBINAR: How I started, scaled and sold – with Rob Pierre

Disclaimer: This blog is for general information purposes only and should not be relied on as legal, financial or tax advice. Every business is different and so are the personal and legal implications of selling it. Always seek professional advice from a qualified accountant, solicitor or financial adviser before making any decisions related to selling or exiting your business.