How to Sell a Business: A Straight-Talking Guide for Business Owners

Selling Your Business Is a Big Deal

Probably the biggest deal you will ever do.

You’ve poured years into building your business. Blood, sweat, late nights, big wins, and tough knocks, it’s all part of the journey nurturing “your baby”. Deciding to sell it is a huge decision and emotional as well. But here’s the truth: if you want to get the best outcome, you need to have a plan in mind as to when and how you will exit and what that would look like financially, timewise and for you personally. The best results come from owners who have, from a long way out, purposely built a business to sell, one that people will want to buy.

This article will walk you through the key steps of how to sell your business, drawing on real-world experience from business owners who’ve done it and mentors who’ve helped guide them through it.

This isn’t fluff. It’s practical, proven advice. If you want tailored guidance along the way, that’s what we do at UK Business Mentoring. But for now, let’s get into it.

How to Sell a Business in 9 Steps

1. Assess Your Readiness

Don’t wait until you’re desperate to get out

Start thinking about your exit strategy well in advance, ideally 3-5 years before you want to sell. Rushing it rarely ends well. It’s also worth bearing in mind that it could take one, two or three years or more to find a buyer. 

Then there is the six months or so of negotiating, due diligence, and then, quite usually, an ‘earn out’ period when you will stay involved in the business for a period of time after the sale (this could be anywhere between one and three years). So you can see a sale could take up to five or six years from initial marketing to you being free to walk away completely.

Before you sell your business, there are a few things you should do to self-assess your readiness:

• Ask yourself why you want to sell. Retirement? New opportunity? Want more time to yourself?
• Define your goals for selling the business. What do you want financially? Do you want to stay involved post-sale or walk away completely? (which rarely happens)
• Write your goals and aims all down. These goals will shape every decision from here on out.

2. Get a Proper Valuation

From a professional who sells businesses

Don’t guess how much your business is worth. Your business is worth what someone is prepared to pay, but you likely need a guide to help you impartially evaluate your business.

A professional valuation will look at historic and forecast profitability, assets, liabilities, customer base, and future earning potential. The value often comes down to a multiplier (which would depend on many factors e.g. industry, recurring income, contracts and the market) of EBITDA (earnings before interest, tax, depreciation and amortisation)

We recommend getting a valuation from a reputable Sales Agent, rather than your accountant. Agents are selling businesses all the time, and they have a much better understanding of what your business is likely to sell for.

3. Clean Up Your Financials

Messy books hinder deals.

Before you begin the process of selling your business, it’s important to ensure your financial records are in order and up-to-date. 

• Ensure your accounts are up to date and accurate for at least the last three years.
• Sort out outstanding debts, late invoices, and personal expenses run through the business.
• Ensure you have up-to-date ‘management information’ (up-to-date P&L/Balance sheet/ aged debtors/creditors, etc) available to show interested parties 
• Have P&L forecasts for the next two years available

We help clients review and tidy up their financials/prepare forecasts ahead of a sale, saving stress and boosting value. If you need support with this, get in touch here, and we can offer expert financial advice.

4. Prepare Key Documentation

Show them how ‘shiny’ your business is!

When selling your business, any prospective buyer is going to need to see key business documents. Typical paperwork includes:

• Full financial records
• Staff contracts
• Client contracts (with a view on how transferable they are)
• Lease agreements
• Details of liabilities

Having all this ready makes due diligence smoother and builds buyer trust. You will ask any prospective purchaser to sign an NDA (a Non-Disclosure Agreement) before releasing sensitive information. Your professional adviser can provide this.

5. Identify and Qualify Buyers

Not every interested party is the right buyer – beware the ‘tyre kickers’

When you start trying to sell your business and get those first bits of interest, it can feel great. But just because they’re interested, doesn’t mean they are a viable option or the right person to sell your business to. First, ask yourself:

• Are they financially credible?
• Do they have experience in your industry?
• Will they look after your staff and customers (if that matters to you)?
• Will they meet your timeline?

Some business owners sell to competitors, some to employees, some to investors. Choose the best fit for your goals.

6. Market Your Business (or Don’t)

Keep mum about it!

This is a delicate process. If you want to keep things quiet, use a broker or discreet networks. If you're open to going public, market through:

• Online business-for-sale platforms
• Industry forums
• Trade press

The best advice is to keep the possibility of a sale to yourself and maybe close directors until such time as a deal is done. You don’t want to create concern or anxiety for your staff unnecessarily or cause them to start looking for new jobs!

You’ll need a solid Information Memorandum (IM), basically a sales pack. We help business owners build a compelling IM that doesn’t overpromise or undersell.

7. Negotiate Terms & Agree the Deal

Now we’re into the fine print

This is where you will move from broad discussions to negotiating the details, and starting to get agreements in writing

• Heads of Terms: Also known as a letter of intent, this is the outline of what’s been agreed. This is a preview of the next step, which is a legally binding contract.
• Business Purchase Agreement: This is the legally binding contract that formalises the sale. This document will include the price, payment structure, any conditions present and timelines (like we discussed above)
• Non-Disclosure Agreements (NDAs): These agreements are used to protect sensitive information and maintain confidentiality.
• Earn-outs or staged payments: These are common arrangements that tie a portion of the sale to future performance.

Work with a solicitor and accountant who’ve done this before, as their expertise can help avoid costly mistakes. This stage is not the time to cut corners!

8. HMRC & Plan for Tax

The Government may want a slice 

Before you agree to the sale, it’s important to know how much you will owe in tax from the sale.

• Make sure you have calculated the capital gains tax you will pay on any sale; your accountant or adviser can help here.
• You may qualify for ‘Business Asset Sale Relief’, which means that on the first £1 million of any sale, you pay a lower capital gains tax rate of 14% and then the standard CG rate above that.
• If selling your business via an EOT ‘Employee Ownership Trust’, the capital gains tax is currently zero, which can be a considerable saving. We can discuss this with you and provide more details on eligibility and the mechanics of how they work.

9. Plan the Handover

It needs to be seamless for the benefit of the team

A smooth transition protects the value you’ve built and ensures your business will continue to be profitable after the sale.

• Presenting the change to the staff who may need reassurance about how it impacts them in the future 
• Are you staying on short-term?
• Do customers need an introduction?
• What training/support will the new owner require?

Common Options for Selling a Business

• Trade Sale – to a competitor, a new entrant to your market or an investor
• Management Buy Out (MBO)– your existing management team buy your business
• Management ‘Buy In’ – when an external management team buy a controlling interest in the business
• Employee Ownership Trust – Where the business is sold to a new ‘trust’ (which is created for the benefit of employees), which then owns the shares of the business and pays you out from business funds/future profits

The right option depends on many factors, and we are happy to explain these in more detail to help you choose the best option for you.

How Can a Business Mentor Help When Selling Your Business?

Selling your business isn’t just a transaction; it’s a huge life decision. And most owners only do it once. That’s where we come in.

At UK Business Mentoring, we work with business owners across the UK to:

• Plan their exit strategy early
• Improve the value of the business before the sale
• Guide them through the sale process
• Help manage the transition emotionally and practically

No long contracts, no tie-ins. Just honest advice, from people who’ve helped sell dozens of businesses before.

If you’re thinking about selling, whether next year or five years from now, get in touch for a confidential, no-pressure chat. It could be the most valuable call you make.