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Selling a business

Selling a business

Selling a business means transferring ownership of the company or its assets to a buyer in return for an agreed price, through a process of preparation, confidential marketing, negotiation, due diligence and legal completion. Outcomes depend as much on preparation and deal structure as on headline price.

On this page
  1. What selling a business involves
  2. Selling shares or assets
  3. What affects saleability
  4. Why sales fail
  5. Transaction costs

What selling a business involves

A sale typically moves from preparation through buyer approaches, offers, Heads of Terms, due diligence and completion. Most owners sell only once, so understanding each stage in advance helps avoid costly surprises.

The business sale process at a glance

  1. 1

    Preparation

    Organise financial information, resolve issues and decide your objectives before going to market.

  2. 2

    Valuation

    Establish a realistic view of value based on maintainable earnings, assets and risk.

  3. 3

    Buyer identification

    Approach suitable buyers confidentially and provide information under NDA.

  4. 4

    Offers & negotiation

    Compare indicative offers on price, structure, terms and certainty, not headline alone.

  5. 5

    Heads of Terms

    Agree the main commercial points in writing before detailed work begins.

  6. 6

    Due diligence

    The buyer verifies financial, legal and operational information.

  7. 7

    Exclusivity & contracts

    Final negotiations and legal documentation, often within an exclusivity period.

  8. 8

    Completion

    Ownership transfers, consideration is paid and handover arrangements begin.

Selling shares or assets

In a share sale the buyer acquires the company with its history and liabilities; in an asset sale it buys selected assets. Sellers usually prefer share sales for tax and simplicity; buyers sometimes prefer asset sales to limit risk.

What affects saleability

  • Owner dependence: whether the business runs without you.
  • Quality and consistency of profits, and of the records that support them.
  • Customer concentration and contract terms.
  • Strength of the management team.
  • Sector conditions and buyer appetite.
  • Unresolved legal, property, tax or compliance issues.

Why sales fail

Common causes include unrealistic price expectations, problems discovered in due diligence, a decline in trading during the process, buyers who cannot fund the deal, confidentiality breaches and owner fatigue. Preparation and an experienced adviser reduce, but do not remove, these risks.

Transaction costs

Sellers typically pay a sale adviser or broker, a solicitor and an accountant or tax adviser. Fee structures vary considerably. See advisers and fees.

What to read next

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