How a business sale works

1. 1

   Preparation

   Review financials, normalise profit, reduce owner dependence and resolve known issues.

2. 2

   Confidential marketing

   Approach suitable buyers with an anonymised summary, then share detail under a non-disclosure agreement.

3. 3

   Meetings and offers

   Meet interested parties and compare offers on price, structure, funding and certainty.

4. 4

   Heads of Terms

   Record the main terms with the preferred buyer, often with exclusivity. Usually not legally binding except for specific clauses.

5. 5

   Due diligence

   The buyer investigates financial, legal, tax, commercial and operational matters.

6. 6

   Legal documentation

   Negotiate the sale and purchase agreement, warranties, indemnities and disclosure letter.

7. 7

   Completion

   Documents are signed and initial consideration is paid.

8. 8

   Transition

   Hand over relationships and knowledge over an agreed period.

Preparation shapes value and how smoothly the process runs. It covers financial records, contracts, owner dependence and the information buyers will request. See operational preparation for a sale, our business value section and emotional readiness to sell.

Buyers usually first see an anonymised summary, then an information memorandum after signing a non-disclosure agreement. Read how to prepare an information memorandum, the two-step sale process and our guide to business buyers.

Interested parties normally submit indicative offers, which are compared on price, structure, funding and conditions as well as the headline figure. The preferred buyer then agrees Heads of Terms, often with a period of exclusivity. See handling offers and negotiations and offer sequencing in negotiations.

Due diligence tests what the buyer has been told. Problems found at this stage are a common reason for price reductions or failed deals. Read preparing for due diligence and legal considerations when selling.

In a share sale the buyer acquires the company with its history and liabilities; in an asset sale it buys selected assets and the seller's company remains. The choice affects tax, liabilities, employees and contracts, so professional legal and tax advice is needed. Our trade sale guide compares the two, and employment law when selling covers staff transfers.

Not all of the price is always paid at completion. Deferred consideration is paid later on agreed dates; an earn-out depends on future performance. Both carry risk for the seller. Read earn-outs: carrot or stick and payment structures compared.

Trading performance needs to hold up until completion, as a decline can affect price and buyer confidence. See maintaining performance during the sale. After completion, owners usually support a handover for an agreed period; our retirement and succession section covers life after the sale. More answers are in our sale process FAQs and negotiation FAQs.