Business owner guide
Planning for the sale of your business
Selling a business can turn years of illiquid business value into personal capital. The financial planning should start before completion — not after the sale proceeds arrive.
Before the sale
Good exit planning starts well before a buyer is found.
The strongest position is usually to prepare the business before a transaction becomes urgent. That can mean reducing owner dependency, improving management information, clarifying contracts, reviewing shareholder arrangements and making sure the company's finances are easy for a buyer to understand.
The amount you need from the sale should be connected to the lifestyle, retirement income and family objectives the proceeds are expected to fund.
Valuation & ownership
Understand both the business value and your personal stake in it.
A headline company valuation is not automatically the amount you will personally receive. Debt, cash, working-capital adjustments, minority ownership, earn-outs and deal costs can all affect the final amount.
Enterprise value
The value attributed to the underlying business operations before certain balance-sheet adjustments.
Equity value
The amount attributable to shareholders after debt, cash and agreed adjustments are considered.
Your shareholding
The ownership percentage, share rights and any other shareholders affect what portion of the value belongs to you.
Deal costs
Legal, accounting, corporate-finance and tax-advisory costs reduce the net proceeds retained.
How the business is sold
A share sale and an asset sale can produce very different outcomes.
In a share sale, the buyer acquires the shares in the company. In an asset sale, the company sells some or all of its business assets and the shareholder may then still need to extract the sale proceeds personally.
The legal, commercial and tax consequences can therefore differ materially.
Changing the structure later can be difficult or commercially impossible. Your accountant, tax adviser, solicitor and corporate-finance adviser should be involved early.
Tax planning
Tax can materially change the amount left after the sale.
Depending on the structure and circumstances, Capital Gains Tax, Corporation Tax and reliefs such as Business Asset Disposal Relief may be relevant.
The availability of reliefs depends on detailed statutory conditions and can be affected by ownership, trading status, timing and the way the transaction is structured.
The personal financial plan should use the expected net proceeds after professional tax advice, not simply the headline offer.
After completion
The sale can shift your wealth from one concentrated asset to a large pool of cash.
That creates a new planning problem: how much should remain accessible, how much should be invested, how much income is needed and how much should be retained for family or estate-planning objectives.
Cash reserve
Set aside tax, known spending and an appropriate short-term reserve before investing.
Investment strategy
Move from concentrated business risk to a diversified portfolio aligned with your objectives and time horizon.
Retirement income
Coordinate sale proceeds with pensions, ISAs and other assets to build the required long-term income.
Estate planning
A business sale can materially change the size and composition of the estate, so wills, gifting, protection and IHT planning may need reviewing.
You do not need to invest the entire proceeds immediately. A staged plan can separate immediate decisions from longer-term investment and estate planning.
The professional team
Business-sale planning crosses several professional disciplines.
A corporate-finance adviser may help with valuation and negotiation. A solicitor handles the legal sale. The accountant and tax adviser assess transaction structure and tax. Financial planning focuses on what the sale needs to achieve for you personally.
A tax-efficient transaction is not successful if it produces the wrong personal outcome, and a strong financial plan cannot repair a poorly structured sale after completion.
Exit planning
What does the business need to sell for to fund the life you want afterwards?
We can work backwards from your personal objectives and help coordinate the financial planning with your accountant, solicitor and corporate-finance advisers before and after the transaction.
Book a conversationThis guide is for general information only and is not personal tax, legal, valuation, corporate-finance or financial advice. Business-sale tax and reliefs depend on the transaction and individual circumstances, and rules can change. Appropriate legal, accounting, tax and corporate-finance advice should be obtained before a sale is structured or agreed. Investments can fall as well as rise and you may get back less than you invest.