How To Sell A Business In 14 Steps

A successful business sale will be straightforward with early planning, research and clear objectives. During the process, you present your opportunity to the market, identify potential acquirers, support due diligence, negotiate terms and facilitate a post-sale business plan.

KBS Corporate has a proven track record of overseeing the entire transaction, boasting 25 years at the forefront of the business sales industry. Now we have compiled our top tips for selling a business, to help make the process as smooth as possible.

Why Sell Your Business?

Multiple factors may lead you to the sale of your business: is now the time to retire? Should you pursue a new opportunity? Would your business benefit from a partner who can provide additional resources?

No matter the reason for wanting to sell your business it is wise to have a growth or exit strategy in place, allowing you to manage expectations as you look to evolve your business.

When Is The Right Time To Sell A Business?

One of the first steps to selling a business is knowing when is the right time to seek a buyer. There are various factors that can influence this.

Is it time you wound down from the pressures of running your company and started enjoying the fruits of your hard work? Retirement is among the most popular reasons for a business exit.

You may need capital to fund a new business venture or a change of lifestyle, in which case selling your company can release equity that you can invest into a different project.

Have you taken the company as far as you possibly can? Perhaps fresh investment and a new outlook is required to unlock further potential if you feel the time has come to step back.

Timing is hugely important when selling a business. If your company is hitting unprecedented heights, it could be the ideal moment to capitalise and sell for maximum value.

You might be aware of factors that could impact your industry in the future, such as prospective legislation changes or supply issues, which may convince you the time is right to sell.

And it’s an unfortunate fact of life that disagreements occur between shareholders. We are experienced in overseeing business sales that enable owners to find the best way forward.

How To Sell Your Business In 14 Steps

1. Set your objectives

Before pursuing a sale, you need to identify your objectives to manage your expectations during the sale.

Selling your business may allow you to consider several exit options, so it is important to bear in mind your initial end goal.

Your desired outcome may account for the value of your business, what it means for your current workforce, and what will be expected of you following the completion of the sale.

2. Organise your documents

A business sale is a comprehensive process in which your company will be scrutinised. Preparing the necessary documentation that allows buyers to conduct due diligence will streamline the deal. Key materials to prepare include:

• Financial accounts highlighting the business’s performance over the past three to five years
• Projections demonstrating the company’s growth trajectory
• A detailed asset inventory
• Key contracts with suppliers and clients
• Information about premises, such as ownership and leasing documentation

Your company accountant will have the knowledge and experience required to assist you in the preparation of these materials and keep them organised for quick access during the sale.

3. Timing your sale

It is never too early to start thinking about how to sell your business, but patience will be rewarded when it comes to starting the process.

KBS Corporate has an extensive understanding of current business sales activity, recognising when you would be well placed to achieve a high sales multiple and maximise your profits.

Ensuring everything is in order before heading to the market is a critical step, so do not hesitate to get in touch with us if you would like to get a sale in motion – making sure you are ready for when the market is in your favour.

4. Research tax implications

Tax implications have to be considered when selling your business. If you sell a business for profit, you are required to pay Capital Gains Tax (CGT) on anything above your tax-free allowance.

However, tax reliefs are available. These include Business Asset Disposal Relief (BADR), which enables you to reduce tax when selling your  business. If your company is eligible, BADR can reduce the rate of CGT by 10%. KBS Corporate’s sister company K3 Tax Advisory is at your disposal to identify any and all ways to minimise your tax implications during a business sale.

5. Get a business valuation

Before progressing through the next steps to selling a business, it would be wise to know how much it is worth. Working with a business valuation expert enables you to set your expectations.

The value of a business is determined by multiple factors and considers your assets, cash flow, workforce, reputation and even external influences such as current market conditions.

KBS Corporate typically works on an offers-invited basis, allowing buyers to present their suggested values and ensuring you are in a position of strength to negotiate the right deal.

6. Prepare a sales brochure

Another of our top tips for selling a business is to highlight its strengths in the dedicated marketing literature to promote its sale.

Being able to effectively communicate your business’s strengths in a concise, easy-to-navigate brochure will interest a larger pool of potential buyers.

KBS Corporate employs a dedicated team of document writers to produce engaging marketing materials, utilising our vast experience in the business sales market to showcase the key factors of your company.

7. Due diligence

Once you have accepted an offer for your business, you will go through the formal process of legal checks and due diligence.

This is a comprehensive process that allows buyers to confirm the assumptions they have made about the financial and operational standing of your company.

To facilitate a smooth process, ensure all liabilities are paid off or disclosed and be prepared to share the necessary financial documents that confirm the business’s status. Buyers will also look to review assets, contracts, any intellectual property the business holds and your company’s insurance policies.

8. Attracting the right buyers

Your chances of finding the right buyer or investor can be subject to the reach of your opportunity. Over the course of 25 years, KBS Corporate has established an extensive buyer network to offer small business owners various options when pursuing a sale.

We scrutinise all potential buyers, establishing their funding status and industry experience to understand if they have the resources and capital to satisfy your exit plans.

9. Consider experienced business sales advisers

While many of the steps to selling your business demand time and determination, it is not a process you need to manage as an individual.

Hiring reliable business sales advisers can support all aspects of the deal, allowing you to benefit from the competitive M&A landscape while maintaining complete discretion.

KBS Corporate’s bespoke, tailored service will aid you through negotiations and due diligence, optimising the potential value of your business.

10. Negotiate the price

You do not need to accept the first satisfactory offer you receive. The negotiation process is expected by buyers and, through regular communication, you can identify their priorities, potential synergies and financial capacity.

When negotiating a deal you will be protected by confidentiality agreements, so there is no need to rush. KBS Corporate will work with you to fully evaluate offers and suggest improvements.

11. Agreeing to the terms of the sale

Once you have accepted an offer, you will agree to the terms of the sale – commonly known as Heads of Terms (HOTs). The HOTs is a complete document that details, in writing, the key elements of the deal, breaking down ownership transfer.

While KBS Corporate will support you through these crucial steps to selling a business, many company owners work in conjunction with their solicitor for legal advice, ensuring the terms of the deal are satisfactory.

12. Completing the sale

Following due diligence, you will finalise the Share Purchase Agreement (SPA) and complete the sale of your business. Solicitors will be the principal leaders of this stage in the process, and KBS Corporate has established a dedicated legal panel to ensure you have access to the expertise you need.

During this legal process, there will be a final review of all documentation relevant to the sale, including purchase agreements, indemnities and warranties, asset transfer and non-compete agreements.

Once satisfied, your solicitor will confirm that the sale can proceed and ownership of shares will officially transfer.

13. Informing your staff

Typically, small business owners wait until a sale has been completed before informing their staff of an ownership change.

Once you have transferred ownership of shares, staff will be informed of upcoming changes. As per the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE), all employees are entitled to the same terms and conditions as they had before the sale.

Should the new owners look to make significant changes to the current personnel structure, it is important to follow a fair redundancy consultation process and make eligible redundancy payments. Even though the sale might be complete, this is still one of the crucial steps to selling a business successfully.

14. Inform HMRC 

And last, but by no means least on our list of steps to selling your business, you are required to inform HMRC about the sale of your business.

Your method of communicating the sale to HMRC will depend on the standing of your business and whether you are a sole trader, a partnership or a limited company.

To inform HMRC, you can use a dedicated online form or contact them via the National Insurance helpline.

6 Mistakes To Avoid When Selling A Business

There are mistakes made by business owners when pursuing a sale, and the six below are the most common:

• Disorganised documents, leaving buyer questions unanswered
• Looking to sell their business when revenue is decreasing
• Not maintaining confidentiality
• Failing to realise the value of the business and pricing themselves out
• Making hasty decisions and accepting inadequate offers
• Mentally checking out, running the risk of damaging the business’ reputation and staff morale before a sale

KBS Corporate can help you avoid these common pitfalls and work with you to understand how to sell your business successfully.

Successfully selling a business

Despite the complexities involved when selling a business, KBS Corporate can guide you through preparation, documentation and deliberation to find the right buyer.

Understanding the sales process will ensure you are ready to proceed, and we have the knowledge and expertise required to prepare you.

Our professionals operate across multiple specialisms, offering you a team of experts to secure the deal you deserve for your business. Contact us today to get started.

How To Sell Your Business FAQs

How long does it take to sell a business?

Selling your business is not a process that can be completed overnight. Whilst KBS Corporate can facilitate expedited sales, it is beneficial to be patient and evaluate your options.

Accounting for sufficient preparation and discussions, completing all the steps to selling your business typically takes between six and 18 months.

How can I sell my business quickly?

We understand that personal circumstances may require you to sell a business as fast as possible.

When it comes to how to sell a business fast, preparation is still key and hiring an experienced business sales expert can help you realise your timeline as effectively as possible, working through the key steps of the business sales process in a timely manner.

Where do I sell a business?

In the modern M&A landscape, there are many ways to sell your business but knowing where to sell a business online is just as important.  Platforms across the internet allow business owners to advertise their companies for potential buyers to consider.

KBS Corporate utilises an active outreach campaign, targeting known buyers in multiple industries to increase the volume of interested parties considering your business.

Our long-standing relationships with international organisations greatly improve your chances of finding the ideal buyer or investor.

How do I find the right buyer for my business?

At KBS Corporate, our objective is to provide the most comprehensive ‘buyer reach’ within the industry, maximising the level of interest in your company and attracting a wide range of potential acquirers.

Our Buyer Matching Engine is a bespoke proprietary software program which uses ‘big data’ and algorithms to streamline the buyer research process and create a priority list, enabling us to generate greater volumes of expressions of interest.

Will I get to keep the cash in my business when I sell up?

If there is cash in the business when it is sold, it becomes part of the transaction. The buyer typically acquires both the business assets and liabilities, including any cash.

It can be used to cover operational costs, investment or to pay off debts, depending on what you agree with the buyer during the sale process.

What tax will I need to pay on a successful business sale?

If you are a sole trader or in a business partnership and you sell your company for a profit, you will have to pay Capital Gains Tax on anything above your tax-free allowance. A limited company is likely to be liable for Corporation Tax on the profit from the sale.

However, there are ways in which you can mitigate your tax liabilities with schemes such as Business Asset Disposal Relief enabling you to pay less.

Can I sell my business with debt?

Selling a business with debt simply adds an additional factor to consider during negotiations with a buyer.

When we coordinate a business sale, we ensure any debt attached to the company is reflected in the final valuation in a way that satisfies everyone involved in the deal.

What will happen to my staff after selling my business?

In many cases, your staff will be unaffected following the sale of your business. Buyers are looking to acquire companies that are operating effectively and generating a profit – what better way to do that than to retain the workforce that made it happen?

Can I still operate in the same industry after selling my business?

Your ability to operate in the same industry will be determined during negotiations as buyers will be eager to retain as many key customers and employees as possible.

Subsequently, you will likely be asked to agree to a non-compete agreement with a duration of three to five years, subject to your sector and region. During this time, you will be prohibited from engaging in activities within the same industry.