How to sell a business

Selling a business can feel daunting, but it doesn’t have to be once you know the process. Our guide explains how to sell a business effectively, outlining the key steps involved from preparation through to completion.

Whether you operate in engineering, construction, e-commerce, IT, or another sector, the principles we cover here apply across all industries.

Table of Contents

Preparing a business for sale

Preparing your business for sale is one of the most important stages in learning how to sell a business successfully. Before approaching buyers, there are several key areas you’ll need to focus on – from defining your objectives to getting your legal and financial documents in order.

Define your objectives before selling your business

There are many reasons why you may want to learn how to sell your business, but it’s crucial to keep your end goal in mind at every stage. Whether you’re aiming for a specific sale price, a full exit, or a partial stake retention, having a clear objective can really help guide the process.

Key steps for preparing your business for sale:

• Know your desired sale value and ensure it’s achievable
• Define the transaction structure: Do you want to retain a stake in the business post-sale?
• Establish your exit strategy: A clear plan helps a business sales specialist structure the process around your goals

Preparing your business financially for sale

The video below outlines the key financial considerations to address before selling a business. Early preparation can reduce friction during due diligence and help protect value during negotiations.

Financial and legal preparation for a business sale

To help smooth the process, attract serious buyers, and ultimately increase your sale value, your business should be financially and legally sound.

Actions you should take include:

• Update financial accounts: Ensure your records accurately reflect the business’s performance
• Project future growth: This helps buyers see the full potential (a business sales specialist can assist with this)
• Compile an asset inventory: Make a list of both tangible assets (e.g., equipment, vehicles, property) and intangible assets (e.g., intellectual property, brand reputation, customer lists)
• Review contracts and documentation: Ensure all key contracts are current and transferable
• Settle disputes: Address any disputes with suppliers, employees, or clients before listing
• Make your business more attractive: Tidy up operations and fix any issues to make it stand out to buyers

Learn more about the legal process in company sale preparation in our guide.

How to sell your business at the right time

Planning the timing of the sale can positively affect the outcome. Once you decide to sell, preparing early is key to maximising your business’s value.

When is the right time to sell your company?

In the short video below, we explain the key indicators that can help business owners determine when the time may be right to sell. Factors such as market conditions, business performance, and personal objectives often play a central role in achieving a successful outcome.

Consider these factors:

• Market conditions: If your industry is strong, you may get a higher price
• Personal circumstances: Whether you’re retiring, seeking a new opportunity, or exiting for personal reasons, your timing should align with your goals
• Need for a quick sale: If you’re looking to sell fast, perhaps due to a business dispute, working with an expert can help you achieve the best possible deal

See our full guide on preparing a business for sale for more advice.

How to value a business before selling

Several factors influence the value of your business, but ultimately, it’s only worth what a potential buyer is willing to pay.

Factors that make it more valuable include:

• The quality of your staff
• The revenue your business generates
• Any liabilities it has
• Your business’s reputation
• The property the business owns
• Any ongoing contractual agreements
• Whether the industry it’s in is growing

However, there are also factors that can decrease its value, such as:

• Being forced to sell your business
• Complex and intangible assets
• Assets that are vulnerable to external influences

To maximise the value of your business, you can hire a company sales adviser to help.

Understanding these factors will help you assess your business’s worth and set realistic expectations for the sale.

Choosing the right method to value your business

A prospective buyer can choose from a variety of methods to calculate your business’s worth, depending on their acquisition goals.

One of the most common ways is the multiple of EBITDA method, where the company’s annual profit (adjusted after tax) is multiplied by an industry-standard figure – usually around five.

In many cases, the valuations we achieve for our clients are higher than the average multiple.

Other methods used to value a company include:

• Times-revenue method: Values the business based on a multiple of its annual revenue
• Discounted cash flow (DCF) valuation: Estimates the present value of future cash flows generated by the business
• Entry cost valuation: Calculates the cost to recreate the business from scratch
• Assets valuation method: Values the business based on the total worth of its tangible and intangible assets

Due diligence: what buyers will review

Interested buyers will want to review your business thoroughly before the acquisition is finalised. This process helps them gain a full appreciation of your company’s health from legal, financial, and commercial perspectives.

Due diligence is a critical part of how to sell a business successfully. The more organised and transparent your documentation, the smoother the sale process will be.

Key areas buyers typically review include:

• Financial due diligence: Budgets, forecasts, financial records, monthly management accounts, statutory accounts (focus: historical performance, financial position, and quality of earnings)
• Tax due diligence: Tax returns, tax-related liabilities (focus: compliance, exposures, and historical tax position)
• Legal & regulatory due diligence: Legal claims, shareholder agreements, client and supplier contracts – legal aspects (focus: ownership, compliance, disputes, and contractual risk)
• Commercial & operational due diligence: Customer complaints, client and supplier contracts – commercial aspects (focus: customer relationships, market risk, and operational stability)
• Human resources due diligence: Employee information, key management agreements if relevant (focus: workforce risk, obligations, and continuity
• Assets & liabilities due diligence: Registered assets (tangible and intangible), non-tax/non-legal liabilities (focus: asset ownership, encumbrances, and balance sheet risk)

In a data room, this is often summarised as: Financial, Tax, Legal, Commercial, HR, Assets & Liabilities.

Our experts cover this in much more detail in this blog on how to prepare for due diligence when selling a business.

How do I sell my business to the right buyer?

Finding the right buyer is a key part of understanding how to sell your business. The ideal buyer isn’t just someone willing to pay a fair price – they should also have the right strategic fit, the capability to grow the company, and values that align with your goals.

While you can try to sell your business independently, doing so could limit the range of buyers you reach. The options that could be attempted are:

• Selling to a similar type of business, such as a competitor
• Listing your company on a sales website or relevant business publication
• Using social media for very small businesses

These methods can help generate interest in your business, while other strategies may also connect you with the most suitable buyers.

Working with an experienced business sales agent can help you navigate the process of selling a business and connect you with the right buyers. A trusted adviser with a track record of completed sales and positive Trustpilot reviews can make all the difference.

KBS Corporate is proud to be the UK’s number 1 in business sales, and we can help support you through your sale. Contact our team today.

How to protect your business while looking for a buyer

When negotiating with buyers, always have them sign a non-disclosure agreement (NDA). It’s common for competitors to pose as buyers when all they’re really doing is examining how your business works. An NDA ensures confidentiality and protects your trade secrets, intellectual property, and other sensitive information.

We also recommend taking these steps to protect your business during the sale process:

• Do your due diligence: Research potential buyers, check their financial qualifications, and verify their reputation before proceeding
• Use secure data-sharing platforms: Virtual data rooms with state-of-the-art cybersecurity give you full control over who accesses your documents
• Keep a few options open: Keep in touch with two or three potential buyers in case one drops out

Taking these precautions helps ensure that your business stays protected while you find the right buyer. If you’d like help managing the process of selling your business securely, make a confidential enquiry here.

Completing the sale: agreements and negotiations

Once the sale agreement is finalised, there are a few key matters you’ll need to address to ensure a smooth transition, including:

• Transferring ownership: When will ownership change hands, and how will this process be managed?
• Final sale value: Confirming the sale price and understanding how this affects your finances
• Deal structure: Clarifying the terms of the deal, such as how payments will be structured and whether there are any contingencies
• Buyer withdrawal: What happens if the buyer backs out after the agreement is signed?
• Informing staff: Knowing when and how to communicate the sale to your team to avoid unnecessary disruption

These steps help create clarity during the transition period and ensure both parties understand their responsibilities.

After the sale: transition, tax and regulatory obligations

Once the sale has fully completed, there are additional tax, regulatory, and administrative responsibilities to take care of. These ensure a clean and, most importantly, compliant exit.

Tax considerations:

• You may need to pay Capital Gains Tax (CGT) on any profit made from the sale
• Reliefs such as Business Asset Disposal Relief may reduce your tax liability
• Our sister company, K3 Tax Advisory, can explain your options and help you structure the deal to extract maximum value

Regulatory steps and notifications:

• Notify Companies House once shares have been transferred
• Inform staff about upcoming changes if this has not already taken place as part of your transition plan

VAT and financial admin:

• If your business is VAT registered, your VAT number may be transferable to the new owner
• The Government’s guidance on VAT registration is a useful resource for understanding your options

If you’re self-employed:

• Notify HMRC of the date you stopped trading
• Complete your final self-assessment tax return
• Note that sole traders, partners and company directors all have slightly different post-sale obligations – covered in more detail in our guide on how to sell a limited company

How to sell a business FAQs