Guide · · 10 min read · Oleksandr Liakhovets
How to sell a business in the UK: a step-by-step guide for owners
Selling a business in the UK usually takes 6 to 12 months from the start of preparation to completion, and the price and timetable depend most on three things: how tidy your finances are, whether the business runs without you and whether you sell shares or assets. This guide takes you through each stage in order, with the tax points and the mistakes worth avoiding.
The short version: stages and timings
A sale runs in stages, and each shapes the next. Owners who rush the early work usually pay at the end, when the buyer finds problems in due diligence and cuts the price or walks away.
| Stage | Rough timing | What it depends on |
|---|---|---|
| Preparing the business and paperwork | 1–3 months, sometimes longer | State of the accounts, reliance on the owner |
| Valuation and asking price | 2–4 weeks | Quality of earnings, comparable deals |
| Finding buyers | 6–16 weeks | Sector, demand, pool of buyers |
| Offers and heads of terms | 2–6 weeks | Number of interested parties, payment structure |
| Due diligence and sale agreement | 8–16 weeks | How ready the documents are, warranties |
Every deal moves at its own pace, and serious preparation, such as making the business less reliant on you, can take six months or more.
What are you selling: shares or assets?
The first decision to take with your solicitor and accountant is the deal structure. It affects your tax, the risks you keep and even what happens to your staff.
Share sale
The buyer acquires the shares in your limited company and takes on the whole business, with its contracts, staff, licences and every liability, past ones included. The employer stays the same, so on paper nothing changes for the team. For the seller this is usually simpler and more tax-efficient, but the buyer then looks harder at the company and asks for more protection in the sale agreement.
Asset sale
You keep the company and sell particular assets: equipment, the client base, the brand, contracts, stock. The buyer picks what to take and leaves the old debts behind. But contracts must be transferred or re-signed, and staff usually move to the new owner under TUPE. If you are a sole trader, any sale is in effect an asset sale.
| Share sale | Asset sale | |
|---|---|---|
| What the buyer gets | The whole company | Selected assets |
| Existing liabilities | Pass to the buyer with the company | Stay with the seller |
| Employees | Same employer, so TUPE does not usually apply | Move to the buyer under TUPE on existing terms |
| Contracts and leases | Continue unless a change of control clause applies | Need assigning or replacing |
| Stamp duty | Buyer pays 0.5% of the price of the shares | Depends on the assets, especially property |
| Seller's tax | Capital Gains Tax, possibly with BADR | The company pays tax, then you take the money out |
Preparation: where to start six to twelve months ahead
Good preparation does more for the price than a strong year in the market. Buyers pay for numbers that make sense and a business with few surprises.
Finances and HMRC
Put the last three years' accounts in order and prepare current management accounts. Keep personal spending out of the company so the true profit shows. Check that tax returns, VAT and PAYE are filed on time and nothing is owed to HMRC. A buyer will find arrears and open queries first.
Companies House and legal housekeeping
Your Companies House record should be current: accounts filed, confirmation statement not overdue, register of people with significant control correct. Gather key contracts, leases, licences and intellectual property paperwork. Check whether any contract lets the other party terminate if the company changes hands.
Staff
Make sure everyone has a written employment contract, pension contributions are paid and no employment disputes are outstanding. Decide which key people you want to keep after the sale and how.
Reliance on the owner
This usually takes longest. If key clients, pricing or technical know-how rest with you, a buyer will cut the price or make part of it depend on later results. Write down your processes, hand some client relationships to the team and put someone in charge of the day-to-day running.
The documents a buyer will ask for:
- annual accounts for three years and current management accounts
- tax returns and evidence that nothing is owed
- main client and supplier contracts
- leases and licences
- a staff list with terms of employment
- a schedule of assets and liabilities, including loans
- paperwork for the brand, website, domains and other intellectual property
Valuation and asking price
Most small and mid-sized UK companies are valued on a multiple of adjusted profit, or EBITDA: the profit the business can keep earning, multiplied by a figure reflecting its sector, size and risks. Where the owner works alone, buyers often look at profit plus the owner's salary. Our guide on how to value a business in the UK covers methods, multiples and a worked example, and our business valuation calculator gives you a quick estimate.
The asking price has to be one you can justify. Too high, and serious buyers stay away, the business sits unsold for months and the price drops anyway. Too low, and you give away money you have earned.
Finding a buyer and keeping the sale confidential
Blind profile, NDA and information memorandum
The business goes to market without its name. Buyers see a short anonymous summary, enough to judge their interest but not to identify the company. Anyone who wants more signs a non-disclosure agreement first. Only then do they receive the name and the information memorandum, setting out the business, its results and how it runs.
Who buys
- firms in your sector that want your clients, staff or local presence
- private buyers who want to run a business themselves
- your own managers, through a management buyout
- investment funds, if profit is large and steady enough
- buyers from the EU and Ukraine who would rather buy an established UK business than start one
Looking to buy instead? See how to buy a business in the UK.
Separating buyers from browsers
Interest is not the same as the means to buy. Before sharing any detail, ask for proof of funds or finance and find out what the buyer is really after. It saves months of talks with people who were never going to buy.
From offer to heads of terms
When comparing offers, look beyond the headline price. How and when you are paid often matters more than a few per cent either way.
| Payment | How it works | What matters to you |
|---|---|---|
| Cash on completion | The full price is paid on completion | Lowest risk, though the buyer may offer less for it |
| Deferred consideration | Part is paid after an agreed period | Security that you will actually be paid |
| Earn-out | Part depends on how the business performs after the sale | A clear definition of how performance is measured |
The agreed terms go into heads of terms. They do not usually bind either side to the sale, but some clauses, such as confidentiality and exclusivity, can be binding. Exclusivity means you agree not to negotiate with other buyers for a set period.
Due diligence: what the buyer will check
After heads of terms, the buyer's solicitors and accountants go through the business in detail. Owners usually find this the most draining stage, as the questions keep coming and each needs a quick answer backed by documents. It typically covers:
- finance: accounts, quality of earnings, working capital, debt
- tax: returns, VAT, PAYE, possible HMRC claims
- legal: contracts, leases, licences, disputes, intellectual property
- employees: contracts, terms, pensions, employment claims
- commercial: clients, suppliers, reliance on a few large contracts
- operations: processes, equipment, systems, risks
The better prepared you are, the fewer reasons the buyer has to cut the price late on.
The sale agreement and completion
Each side's solicitors prepare the sale agreement, called the share purchase agreement (SPA) in a share sale. In it you give warranties, confirming that what you have told the buyer is true, and indemnities, promising to cover specific risks. Their wording decides your exposure after the sale, so go through them carefully with your solicitor.
The final price is often settled in one of two ways. Completion accounts are drawn up as at completion, and the price is adjusted for actual debt and working capital. With a locked box, the price is fixed from accounts at an agreed earlier date and you promise that no money has left the company since. On completion the money comes to you, the business passes to the buyer and any agreed handover period begins.
Tax on selling a business
If you sell shares, the main tax is Capital Gains Tax. For the 2026/27 tax year the rates are 18% and 24%, depending on your total income, and the annual exempt amount is £3,000.
Business Asset Disposal Relief
Business Asset Disposal Relief (BADR) lowers the tax rate on gains from selling a business, up to a lifetime limit of £1 million. The rate has risen in stages:
| Date of sale | BADR rate |
|---|---|
| Up to 5 April 2025 | 10% |
| 6 April 2025 to 5 April 2026 | 14% |
| From 6 April 2026 | 18% |
The main conditions on a share sale: for at least two years before the sale, you held at least 5% of the shares and voting rights in a trading company and were an officer, such as a director, or an employee. Now that the BADR rate matches the basic rate of Capital Gains Tax, the relief mainly helps higher-rate taxpayers. Claim it in time: for sales in the 2025/26 tax year, the deadline is 31 January 2028.
If you live outside the UK
How you are taxed as a non-resident, and how double taxation agreements apply, depend on your circumstances. Take tax advice, ideally before you sign heads of terms.
This is general information, not tax advice. Rates and rules change, so check the current position with your accountant.
Broker, direct sale or investment fund
| Route | When it fits | What to weigh up |
|---|---|---|
| Through a broker | You run the business and have no buyer yet | More buyers and confidentiality, but the broker charges a fee |
| Direct sale | You already have a buyer: a competitor, a supplier or your own team | Quicker and cheaper, but with no competing buyers the price is usually lower |
| Investment fund | Large, steady profits and clear room to grow | A higher price, but more warranties, an earn-out and often a need to stay on |
Brokers charge in different ways: some take an upfront fee plus a completion fee, others only a completion fee. At SC Business Brokers the fee is 3% to 10% of the deal value, paid only on completion and with nothing upfront. You can see how we sell a business or meet the team.
Mistakes to avoid
- Going to market before the accounts are ready.Buyers want figures they can check, not your word for them.
- Pricing on an average multiple found online.A price detached from your own business and real deals either deters buyers or undersells you.
- Telling staff and clients too early.Talk of a sale that may never happen unsettles the team and sets clients looking elsewhere.
- Revealing the company name without an NDA and buyer checks.Once the name is out, you cannot control who knows.
- Comparing offers on price alone.When and how you are paid can outweigh a higher headline figure.
- Signing heads of terms without a solicitor.Some clauses, such as exclusivity, bind you from the day you sign.
- Leaving tax until after the deal.By then the structure is fixed and little can change.
- Letting the business slide during the sale.Buyers spot any drop in results at once, and it shows in the price.
