Steps to
Selling a
Limited Company in the UK
Looking to sell your limited company? There are several practical steps to consider, and this guide walks you through the entire process so you can plan your exit confidently.
All the key considerations are covered, including:
- Valuing your limited company
- Choosing the right sales structure
- Preparing your limited company for a sale
- Finding the right buyers
- Protecting your company during the sale
- Tax and reporting requirements
- FAQs about selling a limited company
Many business owners face complex decisions when planning a sale, from structuring the deal to navigating UK-specific regulations and legal responsibilities.
By the end of this guide, you should feel equipped to sell your limited company securely, and at the maximum value.
Steps to
Selling a
Limited Company in the UK
How to sell a limited company: STEP-BY-STEP
There are a few options available to you when it comes to selling a limited company, including:
- Full sale: Selling 100% of the company and transferring all control to the buyer. Common, straightforward, but requires full due diligence and legal formalities.
- Partial sale / retention of shares: The owner sells a portion of the company but keeps a shareholding and may step into a less senior executive role. Less common, more complex, and requires clear agreements on control, decision-making, and shareholder rights.
- Handover arrangement: The seller remains involved for a set transition period to support business continuity, while gradually reducing their responsibilities. Uncommon but flexible and useful in knowledge-intensive businesses. Requires careful planning to define roles and their duration.
Here’s a full breakdown of the key considerations for any exit strategy, so you’re aware of the operational, financial, and legal factors that must be addressed to successfully complete the transaction.
1. Value your limited company
Before beginning the process of selling a limited company, it’s important to establish a realistic valuation, as this sets clear expectations of what buyers are likely to pay and guides you in structuring the deal. It also highlights any issues you may need to address before hitting the market.
You may have an initial price in mind, but the true value is ultimately determined by what a buyer is willing to pay. A practical valuation process typically includes:
- Assessing the market: Reviewing recent sales of similar companies in your sector to understand current demand.
- Identifying key areas of value: Such as recurring revenue, strong margins, or growth potential.
- Engaging motivated buyers: Building a list of motivated acquirers gives you the best chance of competitive interest.
- Using expert valuation support: Contacting specialist advisers can help you maximise the valuation.
Read this guide on how to value a company for a full list of the documents you’ll need and the steps involved in achieving a fast and accurate valuation.
Once you understand your limited company’s value, the next step is deciding the structure of the sale, such as whether to sell shares, assets, or a combination.
2. Choose the right sales structure
Decide whether to sell shares or assets
If you’re wondering, ‘can I sell shares in my limited company?’ you’re not alone. It’s a common question for those selling a limited company, and the answer depends on:
- Your shareholders
- The company structure
- Whether you want to transfer ownership fully or partially
The transaction usually involves transferring shares to the buyer for an agreed value. If the buyer is a third party with no prior connection to the business, all shareholders must agree to sell their shares to complete a full sale.
In a share sale, the company’s assets and liabilities transfer to the new owners automatically. In an asset sale, only selected assets (and agreed liabilities) transfer to the buyer.
Once you’ve decided on a share sale, the next step is to determine whether to sell all your shares or retain a stake, which we explain below.
Selling your shares (full company sale)
A full share sale involves transferring 100% of your limited company’s shares to the buyer, giving them complete ownership and control over the business. There are several things to consider, including:
- Shareholder approval: You must ensure all existing shareholders consent to the sale.
- Legal steps: Formal share transfer agreements and board approvals to legally finalise the deal.
- Communication: Informing employees, customers, and suppliers is essential for maintaining business continuity.
- Financial clarity: The buyer will conduct full due diligence on your limited company’s accounts, debts, and contracts.
If you’re looking to exit the business completely or retire, you may want to consider a full sale as it can provide a clean, straightforward acquisition.
Want to remain in the company after the sale? A partial disposal may be more suitable.
Partial sale: selling some shares
If you’re leaning towards a gradual exit, a partial share sale may be the best option.
It allows you to retain a stake in the business while bringing in a new investor or partner, and can provide capital, expertise, or strategic support without you giving up full control.
You’ll likely want to consider:
- Shareholders’ agreement: Define roles, responsibilities, voting rights, and exit options to avoid any future disputes.
- Impact on control: Selling a portion of shares reduces your influence over key decisions, so plan carefully before making final agreements.
- Operational continuity: Decide whether to stay involved day-to-day or step back gradually to provide clarity for you and the wider business.
When learning how to sell a limited company, considering a partial sale could be ideal if you want to fund growth, share responsibility, or prepare for a full exit down the line.
Selling limited company assets (asset sale option)
Unlike a full or partial sale, an asset sale involves the buyer purchasing specific assets rather than the company’s shares. It’s useful if you want to:
- Sell part of your limited company only: E.g., a specific brand or division
- Limit liabilities: Avoid transferring certain debts or obligations to the buyer
- Increase flexibility: Allow buyers to select specific assets
If you opt for this when selling a limited company, assets can include both tangible and intangible items, such as:
- Property
- Stock or equipment
- Intellectual property
- Customer lists
- Existing contracts
Liabilities, such as debts or other obligations, may or may not transfer depending on the agreement.
The main downside to asset sales is that they can be more legally complex, require more documentation, and may have different tax implications compared with a share sale.
Shareholder pre-emption rights
Your company’s Articles of Association or Memorandum of Association may include pre-emption rights, which restrict the transfer of shares.
This means that if you want to sell your shares, you may first need to offer them to existing shareholders before selling them to an external buyer.
Here are some of the key steps for handling pre-emption rights:
- Check your Articles of Association and any shareholders’ agreements to see if pre-emption rights apply.
- Offer shares to fellow shareholders: Formally give them the opportunity to buy your shares before approaching external buyers, if required.
- Set a clear timeframe: Your company documents may specify how long shareholders have to respond.
- Plan for negotiation: If shareholders decline, you can then proceed to sell to a third party.
Understanding and respecting pre-emption rights early helps avoid legal disputes when selling a limited company and keeps your sale on track.
3. Prepare your company for a sale
Prepare your limited company for due diligence
Early preparation for due diligence makes the overall process of selling a limited company much smoother. Due diligence is essentially the process buyers use to assess risk and verify the information you provide.
This detailed guide on preparing for due diligence when selling a business covers the full process.
Having your company’s financials, contracts, HR records, tax liabilities, and key operational documents in order beforehand means that once an initial offer is made and the Heads of Terms are signed, the buyer can complete their investigation without unnecessary delays.
As part of this preparation, you’ll also need to review how existing liabilities will be handled as part of the sale.
Transfer of company liabilities
It’s important to understand how financial commitments may transfer to the new owner, which depends on the type of sale structure agreed. These can include:
- Accounts payable
- Staff costs and salaries
- Taxes
- Loans
When buyers perform due diligence, they will scrutinise these liabilities. So, when preparing to sell your limited company, it’s a good idea to:
- Review and document all liabilities: Gather a clear list of debts, outstanding payments, and ongoing obligations.
- Settle what you can beforehand: Paying off debts or clarifying obligations makes the business more attractive and can speed up the sale.
- Be transparent with the buyer: Accurate financial statements help avoid disputes and encourage smoother negotiations.
Managing liabilities carefully is an important part of selling your limited company. It helps protect your reputation and gives you more leverage during negotiations.
4. Find and evaluate the right buyers
Identifying potential buyers
The main goal is to find a buyer who is the right fit for your business. Potential buyers can include:
- Existing partners or shareholders: May have an interest in taking on more ownership of the company.
- Family or friends: Someone you know and trust who understands your business could be a suitable option.
- Trade buyers: Companies in the same or related sectors looking to expand their existing products, services, or share of the market.
- Investors: Private investors or venture capitalists seeking growth opportunities.
If there are multiple shareholders, you may be contractually bound to offer them first refusal before pressing ahead with a sale to an external buyer.
Assessing buyer suitability
Just as buyers will carry out due diligence on your limited company, it’s equally important for you to check that potential buyers are financially capable and trustworthy. Steps you can take include:
- Request proof of funding: Ask buyers to show they have the capital needed to complete the purchase.
- Check financial standing: Review their credit reports or other financial information to ensure they can meet obligations.
- Verify experience and references: Confirm whether they have relevant business experience or references from previous transactions.
- Document everything: Keep records of all checks and communications to avoid disputes later.
Following these steps helps you engage only with credible buyers when looking to sell a limited company and reduces the risk of delays or failed transactions.
5. Protect your limited company during the sale
Before sharing company information with potential buyers, it’s important to safeguard sensitive data. The most helpful tips for sellers include:
- Use a Non-Disclosure Agreement (NDA): Ensure potential buyers sign an NDA before you share confidential information.
- Define what’s protected: Include financial data, client lists, trade secrets, or any other sensitive information.
- Understand your rights: If a buyer misuses confidential information, you may have grounds for legal action.
Taking these precautions helps you protect your company’s data, maintain the trust of employees and customers, and reduce the risk of disputes if a sale doesn’t go ahead.
View our guide on the 14 different ways to sell a company for more tips on the overall process.
6. Understand the tax and reporting requirements
Capital Gains Tax when selling a limited company
You may need to pay Capital Gains tax (CGT) on the profit you make from the sale of your limited company. It’s the difference between what you receive and what you originally paid for the company.
Understanding how this works is important, as it helps you plan your sale and potentially reduce your tax bill. The main steps to take are as follows:
Calculate your gain accurately: Include the original investment amount, allowable costs, and any improvements made while you owned the business.
Check if you qualify for tax reliefs: For example, Business Asset Disposal Relief (formerly Entrepreneurs’ Relief) can reduce the CGT rate to 14% on the first £1m of gains, compared with the standard 24% rate.
Plan for timing and structure: How and when you sell shares or assets can affect your CGT liability, so you may want to consider professional advice.
You can read our full guide to tax on selling a business here.
Inform Companies House
Within 14 days of completing the transfer to the new owner, Companies House must be informed of any changes to where the company’s records are kept or the identity of any new directors or company secretaries.
The official time limits are:
- 15 days to inform Companies House about changes to your constitution or Articles of Association.
- One calendar month if you issue more shares in your company.
You must also inform HMRC by completing a company tax return covering the accounting period up to the sale date.
FAQs about selling a limited company
HOW LONG WILL IT TAKE TO SELL MY LIMITED COMPANY?
Selling a limited company involves multiple steps, so it rarely happens overnight or even within a few weeks. Timelines vary, depending on factors like the company’s size, financial health, complexity of the sale, and whether you’re selling shares or assets.
Typical stages and their approximate durations might include:
- Preparation and valuation: Getting accounts, legal documents, and business information in order: 2-6 weeks.
- Marketing and attracting buyers: Identifying motivated buyers and sharing information: 4-12 weeks.
- Due diligence and negotiations: Buyer investigation, responding to queries, and agreeing terms: 4-8 weeks.
- Completion and legal formalities: Share or asset transfer, updating Companies House, and final transactions: 2-4 weeks.
You can potentially shorten the process by following the tips in this article, particularly around keeping your financial and legal records accurate and up to date. However, there’s no strict timeline.
WHAT ARE THE TAX IMPLICATIONS OF SELLING A LIMITED COMPANY?
In addition to CGT, profitable businesses also need to consider Corporation Tax when selling a limited company.
- Capital Gains Tax (CGT) is paid on the profit you make from selling shares in your limited company.
- Corporation Tax applies to profits made from selling the company’s assets.
Understanding the different tax implications when selling a business is important, as it can influence whether a share sale or an asset sale is more tax-efficient for your business.
CAN I SELL MY LIMITED COMPANY WITH DEBT?
Yes, and there are several options. Some debt can be paid off before the sale or settled using proceeds from the sale. Alternatively, debts can be passed on to the buyer, though this usually impacts the value they are prepared to pay.
You can find out more about selling a limited company with debt in our article on how to sell a struggling business.
DO I NEED SHAREHOLDER PERMISSION TO SELL MY LIMITED COMPANY?
If ownership of the company is divided, permission from the other shareholders is typically required before you can sell your limited company.
Where pre-emption rights apply, these can be waived. However, shareholders also can veto a sale to a buyer they do not want to enter into business with.
can i sell a dormANT LIMITED COMPANY?
While it’s possible to sell a dormant limited company, it can be challenging due to the lack of recent trading activity. Even when dormant, annual accounts and a confirmation statement must still be filed with Companies House.
A dormant company may appeal to a buyer if it has an attractive name or distinctive business proposition, but in most cases, it will likely need to be reactivated before becoming a viable acquisition opportunity.
can i REMAIN A SHAREHOLDER AFTER SELLING A LIMITED COMPANY?
There are no rules in place to say you can’t, and it will be largely dependent on the formal agreement you make with the new owner.
The acquirer may be keen for you to stay on in a handover capacity for a certain length of time as they learn more about the company, whilst also giving customers and suppliers a sense of continuity and security.
SELL YOUR LIMITED COMPANY WITH SPECIALIST ADVICE
Ready to explore your options for selling your limited company? KBS Corporate’s team of experts can guide you through every step, from valuation and marketing to negotiations.
Whether you’re testing the waters or ready to start a sale, receive confidential, no-obligation advice. Learn more about our company sale services and contact us today to discuss the approach that works best for your business.