Complete the sale of your business

To successfully complete the sale of your business, there are a number of key steps to follow, including getting a valuation, attracting buyers, choosing advisers, and identifying and approaching potential purchasers.


8 min read

1. Overview

This guide explains how to complete the sale of a business. It sets out how to approach negotiations with potential buyers and what to consider when weighing up offers.

It also covers closing a sale agreement with your buyer and the checks they'll need to make.

While price is important when selling, there's a range of other factors you'll need to consider - including staff and tax implications.

2. Preparing your business for sale

When selling your business there are several stages that need to be completed in order to achieve a successful outcome. Typical steps include:

  • valuing your business
  • preparing your business for sale, including taking steps to increase its value
  • taking early tax advice to highlight issues which might affect your deal later - vital if you want to minimise the tax burden
  • identifying potential buyers
  • marketing your business
  • meeting and negotiating with potential buyers
  • completing legal due diligence with the buyer
  • finalising the sale agreement and transferring ownership

It's worth spending some time prior to the sale getting your business into shape. This could include cutting costs, reducing debts and reducing excess stock to get your finances into good order.

There are several methods of valuing your business. It is advisable to seek specialist help from your accountant or a corporate adviser. They will be able to advise you on an appropriate valuation method and help you get a realistic valuation. They will also be able to help you identify and market your business to potential buyers.

3. Initial meetings with potential buyers

Gauge the interest of potential buyers by holding initial meetings with them. The approach you take towards negotiating with potential buyers is crucial.

The aim is to build a relationship with possible buyers and discuss some of the key issues.

Consider asking your legal adviser to draw up a non-disclosure agreement for prospective buyers to sign. This ensures details of your business remain confidential.

After this it may be appropriate to allow serious buyers to look round your premises. This could help to accelerate the sales process - though you may prefer to wait until you have received indicative offers before you do this as confidentiality is vital and you may want to avoid giving away too much information at this stage.

Financial information

So that they can make an offer, you'll need to provide potential buyers with accurate financial information, including final or audited accounts where relevant and forecasts for the year ahead.

Clearly, releasing commercially sensitive financial data - possibly even to a competitor - is a worry. Ask your advisers how best to go about this.

Read guidance on how to choose and work with an accountant.

It might also be worth providing potential buyers with a valuation of your business drawn up with your advisers. This will give them an idea of what you're expecting.

After your initial meetings, you should whittle down the field by inviting buyers to make written indicative offers which include:

  • the price they're prepared to pay
  • how they plan to structure the deal
  • proposed timetable for completion of the deal

4. How the deal is structured

Price is just one factor to consider when weighing up offers for a business. For example, the potential buyer's proposed timetable for completing the deal is important - as a drawn-out sale could be damaging to your business.

You also need to be sure the prospective buyer can meet the price they're offering. The offer will be worthless if they can't finance it. Examine what proof of financial backing they have - this could include mortgage or loan agreements, share certificates or evidence of personal savings.


Consider how the deal will be structured. A one-off cash payment may be the most appealing option, but it might not be the most tax efficient and it's possible you'll have to accept some form of deferred payment.

You may be offered a combination of cash and shares in the purchaser's business. But it's really only worth accepting shares if they're in a quoted company. Your buyer might also prevent you from selling your shares for some time.

If you are offered deferred payments, establish whether or not they are guaranteed. Buyers may want to lessen their risk by making future payments based on the business' future performance - known as an earn-out.

While earn-outs may increase the final amount you receive, there are inherent risks and you may not receive as much as you expect. Continued management involvement can enable you to influence the meeting of the performance targets. But you may decide that you no longer wish to be involved in the business once you have sold it.


Remember that you're likely to have to pay Capital Gains Tax on the sale of your business. Speak to your accountant to discuss how you can minimise your liabilities for Capital Gains Tax and make the most of the reliefs available.

Read guidance on how to choose and work with an accountant.

5. Your responsibilities and liabilities

A key part of any offer will be the responsibility you have to take on for any business liabilities such as employees, outstanding debts, tax and VAT obligations.

It's likely that your buyer will ask you to provide them with reassurance about what they've bought and protection against future liabilities in the shape of warranties and indemnities.


Warranties provide legal confirmation that certain facts relating to the sale of the business are accurate. For example, you might have to guarantee that financial information you have shown to the buyer is accurate and that the assets you claim to own exist. The buyer may be able to claim against you if the information is later found to be incorrect.


Indemnities are promises to reimburse the buyer for any losses resulting from specified future events. For example, you may have to indemnify the buyer against any penalties resulting from tax or VAT inspections into accounts drawn up before they took over the business.

Giving these commitments may help you get a higher price. But you need to clarify exactly what you stand to lose. Before you agree any warranties and indemnities they should always be scrutinised by your team of advisers.

Responsibilities to staff

You may also want to consider how a deal will affect your employees - you may want to get an agreement that there will be no redundancies for a set period, for example. You should also check your legal responsibilities to staff under the Transfer of Undertakings (Protection of Employment) Regulations (TUPE).

6. Choosing and negotiating with a buyer

Once you understand all the offers on the table you can narrow down the field and start negotiating with your short-listed potential buyers. Your adviser can lead the discussions and provide you with advice at every step.

Once you have identified your preferred buyer it's essential to develop a relationship based on trust. Only discuss the deal with this candidate and don't try to negotiate better terms at this stage. It's important you understand any offer before accepting it, particularly any liabilities you will be taking on.

Create a written agreement

You then need to agree Heads of Terms with the buyer - sometimes known as a 'letter of intent' or 'Heads of Agreement'. This is a document setting out the key points of the deal. For example, what the buyer has agreed to buy (eg shares or assets), the payment structure (ie how and when they will pay), who will pay the costs, a list of assets, details of contracts and responsibilities to employees.

It acts as a written record of the key features of your agreement which can be used to brief your lawyers or accountants. It may also provide an exclusivity period during which you are not allowed to negotiate with anyone else. Your professional advisers will help you draw this up.

Parts of the document may be legally binding - it might set out responsibility for the payment of legal fees if one party pulls out, for example.

You should also inform other interested parties when you have done this.

7. Undergoing due diligence

Once initial sale terms are agreed your buyer will review commercial aspects of your business - such as contracts, staff and key customers - to ensure the claims you have made about the business are accurate. This process is known as due diligence.

Don't start due diligence until you have agreed a price and terms with the buyer. The investigation period is negotiable and normally runs simultaneously with the legal process as the two are linked, although all sales are different. The process can be speeded up if you and your staff are as co-operative as possible.

Your buyer and their advisers will probably need to spend some time at your business' premises reviewing original documentation, but try to ensure as much work as possible is carried out off-site. The process must be controlled to guard against it being used as an excuse for renegotiating the deal.

The due diligence process is likely to cover:

  • the business' past and forecast financial performance
  • accounts
  • valuation of property and other assets
  • legal and tax compliance
  • any outstanding legal action against the business
  • major customer contracts
  • intellectual property protection

The final sale agreement

As the due diligence process nears its conclusion you and your advisers should finalise the sale agreement. This will contain the exact details of the sale, much of which should have been outlined in the heads of terms. There will have been compromise on both sides to obtain a final document that is acceptable. But you should maintain a dialogue with all parties to ensure the final agreement is acceptable and contains no hidden surprises about your future liabilities.

Your advisers should ensure you fully understand the terms of the agreement you are signing and the full extent of any indemnities and warranties you have agreed to.

Read our guide Achieving an employee buyout.

Get the support you need right now

You can connect with us through the contact form, call us or contact your local Business Gateway office.

You might also be interested in

Employee ownership

If you own a business, there will come a point where you need to decide what will happen when you want to retire or exit the business. Considering what you will do next is something that takes time, and you need to have a clear strategy that works for you, your family, and your team.

Selling or closing your business: the basics

If you decide to close or sell your business there are a number of obligations you'll need to meet, including tax issues and responsibilities to employees and suppliers.

Value and market your business for sale

Assessing the value of your business is an important first step in the sales process. You should also consider how you are going to find and approach potential buyers.