Andrew Robins

Published 8 December 2022

Selling a Business

Selling a business can come about for a variety of reasons, including the need to raise capital, your retirement, or just a simple change of direction, focus, or circumstances. It may be something you’ve planned for a long time or something that has come about as a result of an unexpected opportunity or need.

Ideally, you should have the sale of your business in mind right from the outset or acquisition of the business. This approach enables you to organise and run the business with the end goal in mind and is likely to mean you are much better prepared when an opportunity comes along. That said, it is never too late or too early to start preparing for sale and careful planning will be key to a successful and smooth transaction. So in this post, we take a quick look at the main areas you will need to consider.

The timing of your sale

Whilst the timing of your sale may be part of your overall planning, it will probably be influenced by a combination of company performance and market conditions. Not least because these two factors are likely to be extremely influential when it comes to the valuation of your business, and ultimately the agreed sale price. 

It perhaps goes without saying that if you’re trying to sell following a period of declining profits and or poor performance, you’re likely to attract a lower sale price whereas at times of great profits and success you may not want to sell at all even though this might be the best time to do so. You need to keep all these factors in mind as you decide on timing so that you can make your decision objectively.  

Type and structure of sale

You will also need to decide what type of sale you want to achieve, whether that’s a sale of the business as a stock sale, asset sale, or both, although to some extent this may be determined by the reason for your sale (for example, whether you want to retire or raise capital). If your buyer purchases the business in its entirety, they inherit everything including the liabilities which may be an important factor for you.

It’s also a good idea at this stage to consider different payment approaches. For example, would you be prepared to agree to deferred payments? Other issues to take into account at this stage also include the different tax consequences depending on the structure of the sale. There will also be employment issues to consider and whether the Transfer of Undertakings Regulations are activated (transfer of employer obligations to new owner) and to what extent that you as seller want to continue to be involved with the company and for how long.


There’s much to be done to get your business sale ready. But bear in mind, the likelihood is that at the very least a sale will take months and very possibly years to achieve.

Documented processes and up-to-date contracts

It’s important to make it as easy as possible for your buyer to take over running the business, and this means all your processes need to be clearly documented and up to date. This includes your business model, sales and marketing strategies, your production processes and logistics, your supplier contracts, your employment policies, handbooks and contracts, and any leases or finance agreements. If you have any outstanding disputes, these need to be resolved if at all possible.

Protecting assets

If you have intellectual property you need to ensure this is appropriately protected by way of trademarks, patents, etc.


All financial records need to be kept up to date and consider an audit to ensure everything is as streamlined and efficient as possible.

Third party considerations

If you need any prior consent for a sale to proceed such as landlord or supplier approval, get these organised early.


There are different ways to approach the valuation of your business, and which is right for your business may depend on your ambitions, the structure of your business and the type of sale. In almost all cases you will need expert advice in reaching a realistic and fair valuation. Business valuations are often described as an art form rather than a science although in reality, they are a combination of both. Apart from performance, income, and market conditions, valuations will also need to take into account assets (or lack of) and liabilities.

A valuation based on the business assets is likely to include a valuation of property, equipment, and intellectual property and will need to allow for depreciation. As this type of valuation takes no account of income, etc. it’s really only appropriate for liquidations or failing businesses.

In simple terms, a valuation based on performance involves calculating the net value of the business’ income and making projections in respect of future cash flows and income. There are various recognised formulas that can be applied to estimate the company’s profitability. Occasionally, a business may be valued simply according to market demand and the value of similar businesses that have already sold.

Due Diligence

Whilst due diligence may be the responsibility of the buyer, there is much you can do to prepare and assist the process. In fact, the better prepared you are, the less time and cost involved in the due diligence process.

Start by making sure there are no nasty surprises in store for the buyer and by being completely transparent. It’s a good idea to ask the buyer for a list of documents and information they require.

This is an area where having an experienced lawyer is essential so that they can deal with any confidential or sensitive issues and protect your interests with the necessary non-disclosure agreements or by limiting who the prospective buyer can speak to.

As a rough rule of thumb, the buyer will normally want to see:

Corporate structure:

  • Board, stockholder, and director meeting minutes
  • Certificate of Incorporation, etc.
  • Company organisation, including any parent or subsidiary companies


  • Statutory accounts, tax liabilities, etc.
  • Balance sheets, forecasts, budgets, and monthly management accounts
  • Employee, client and supplier contracts
  • Shareholder agreements, asset registers, etc.

Intellectual property:

  • All trademarks, patents, intellectual property assignments, copyrights, domain names


  • A company inventory
  • Any property, equipment, technology or assets


  • Supplier contracts
  • Loans, credits, partnerships, or settlement agreements
  • Non-compete agreements and license agreements
  • Relevant insurance policies


  • A list of all or any litigation and any threatened litigation
  • A list of unsatisfied judgments, settlements or injunctions


This is yet another area where having an experienced professional to negotiate selling a business on your behalf can be crucial. However, before formal negotiations start, you may wish to have an informal conversation with a potential buyer. This can help identify whether they’re a good fit and share your goals. You should also make sure you have a good idea about what you want to achieve from the sale as well as what you are prepared to compromise on and at what point, you’d walk away from a deal.

Negotiations will need to cover much more than just the sale price and will include warranties and guarantees, indemnifications, covenants, deferred payments and other payment terms, price adjustments, completion details, termination rights, conditions precedent and more.  

If you’d to discuss selling a business or the purchase of a business, please get in touch.

For more information, you may also be interested in:

An Examination of a Share Purchase Agreement

Deferred consideration in business sales

Your business exit plan

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