Sell My Business: A Step-by-Step Guide

In this article we’ve painstakingly sifted through the process of selling a business, so that business owners can leave with a full understanding of the process and how they can prepare. What we are NOT going to do is claim, like a lot of firms out there, that there is a ‘quick fix’ or a way to ‘sell your business fast’. Having worked with small business owners for 10 years now, we have both the legal and accounting experience to understand the process fully. The reality is, selling a business can take time, and whilst it does rely on a speedy legal process once the purchase is underway, it also requires sometimes years of preparation to get your business in a state that is ready to sell. So, without further ado, let’s dive in.

Is It the Right Time to Sell My Business?

Before you list your business for sale, you need to make sure it’s in a good state to sell. Just like selling a house, if you are to sell your business without the necessary preparation to make sure its spick and span, you’ll likely get a less attractive price. The more preparation you do, the better price you’ll eventually get. So, from our experience, we’ve pulled together some important questions to help you see if your business is ready for sale.

1. Can the Business Operate Without You?

If your business is entirely dependent on you, it may not be attractive to buyers. As harsh as it may sound, the quote from Michael Gerber applies here:

“If your business depends on you, you don’t own a business—you have a job. And it’s the worst job in the world because you’re working for a lunatic!”

Ideally, your business should run smoothly without your day-to-day involvement. Buyers are looking for systems, teams, and leadership that can function independently. Simply put, if your business can’t operate without you, it may be difficult to sell.

2. Do Your Top 3 Clients Make Up Over 50% of Revenue?

Buyers are wary of risk, and heavy reliance on a small number of customers is a red flag. Great, you may have a client that is providing a large part of your income, but what happens if they leave? Think of it the same way as an investor would. What’s more sensible, having all your money in one investment, or having a diversified portfolio that is set up to weather any losses?

A diversified customer base is much more appealing and shows financial stability. If your top three clients contribute to more than half of your revenue, it may reduce the perceived value of your business as it poses a potential risk should things go pear-shaped.

3. How Much Profit Does Your Business Generate?

A business that is loss-making or only marginally profitable is far less likely to attract interest. Buyers typically seek businesses with annual profits exceeding £250,000, which for many small-to-medium businesses equates to at least 25% of annual revenue if turnover is around £1 million. This level signals a well-established, scalable operation. Once profits reach the £1 million EBITDA range, the value buyers are willing to pay often multiplies by 200–300% or more compared to businesses at the £250,000 mark. You can sell a business that isn’t profitable, however it becomes more reliant on assets, both tangible and intangible.

4. Can the Business Afford to Pay You a Commercial Salary and Still Be Profitable?

Ask yourself whether the business would remain profitable if it paid a market-rate salary to someone replacing your role. If the answer is no, buyers may see the profitability as artificial or unsustainable which may be off putting or negatively affect the price. Put yourself in the position of a buyer, would you want to buy a business that wasn’t even providing you with a salary similar to what you could earn elsewhere?

5. Is Your Business Growing?

Stagnant or declining revenue will raise certainly raise red flags. Buyers want growth potential, and strong revenue growth is a major factor in increasing your business’s value. It shows you have a strong pipeline of new work, and that if you lose clients, there is a stream of opportunities to replace them. A buyer will want to buy your business so they can grow it, and if there isn’t any evidence of that, it may be more difficult to get interest.

6. Is the Market Growing?

Even if your business is performing well, it’s important that your industry or market is also growing. A declining market can reduce future opportunities and make your business less attractive. Also, pay attention to what is going on in the world. Have the government introduced sanctions or taxes that affect your industry? Is there less appetite for what you offer? Buyers will be thinking about this, so you should too.

7. Is Your Product or Service Differentiated?

The more unique your offering is, the more appealing it will be to potential buyers. If your business is one of many doing the same thing, it may struggle to stand out. However, a clearly differentiated or niche offering can significantly enhance its value. If you don’t know what this is, don’t expect a potential buyer to be able to!

 

What happens if there is a dip in the market – will it affect my sale?

No matter how hard you try to get your business in good shape to sell, sometimes outside forces will feel like they’re working against you. The Pandemic was an obvious example of this, and many businesses are still feeling the effects of this period to this day. A decline in the market may negatively affect your valuation and could reduce the demand, or the type of sale you go for.

A prime example of this was the decline in retail which caused brands like Debenhams and Topshop to struggle to find buyers at an attractive valuation. This was partly due to the decline of the high street which saw more people shopping online. Ultimately, the market conditions resulted in ASOS purchasing the IP of Topshop, and the physical stores were shut completely. In this case, although a sale wasn’t impossible, it probably resulted in a change of expectations from the perspective of Topshop, and a subsequent restructuring which resulted in ASOS only purchasing the assets they wanted.

A dip in the market, may therefore, determine  whether you do an asset or a share sale, which in simple terms defines whether you sell your whole business or just parts of it. Both have differing tax treatments, so it’s important to seek advice first. Get in touch with our team for guidance, or, you can read the blog we’ve written on the topic:

Understanding Tax When Selling a Business: Asset vs Share Sale

 

How to Prepare My Business for Sale

Preparing your business for sale isn’t something to leave until the last minute. The most successful exits are planned well in advance, typically over a 3-to-5-year period. Starting early allows you to push for both growth and profit while eliminating any potential deal breakers that could hinder a sale, some of which we’ve touched on above.

Create a 3–5 Year Plan

The first step towards a strong exit is creating an exit plan.

This exit plan should set out how your business will overcome constraints to growth, define and refine your core proposition, and focus on delivering maximum customer value. Do you need to put a solid management team in place before you sell? Are you overly reliant on a few clients?

We work with our clients to work to identify what their goals are, and from there we build exit plans that put the necessary steps in place to get there. A good benchmark we’ve found is to aim for £1 million in EBITDA. Why? Because it hugely effects the multiplier you’ll get in terms of value, which we’ll get to later.

Remove Deal Breakers

As part of your planning, identify and eliminate any potential deal breakers early on. This includes addressing key person dependencies, where the business is overly reliant on one individual. Building a dependable management team that can run the business without your input is how you get round this, which will be attractive to any potential buyers.

Customer concentration is another risk factor; businesses that rely heavily on a small group of clients can be viewed as unstable. Lastly, ensure your profitability is as strong as possible, poor profitability is a red flag for potential buyers.

Creating and executing a five-year plan allows you to systematically address and resolve these critical issues before going to market.

Balance Profit and Growth

While high growth is attractive, it often requires significant marketing spend, which can reduce profitability in the short term. Striking the right balance between profit and growth is essential.

A strategic approach involves investing early in marketing to build momentum and brand equity, then gradually easing off closer to the exit point. This method helps achieve strong growth rates initially, while ensuring that profitability improves leading up to the sale, making your business more appealing to prospective buyers.

Ultimately, a well-prepared business, one that shows both growth and solid profitability, is far more likely to result in a successful and lucrative exit. And remember, you don’t have to navigate this journey alone, expert guidance can help you plan and execute your exit strategy with confidence.

 

How is My Business Valued?

When planning to sell a business, one of the most important questions to answer is: “How much is it worth?”. The question to ask first though, is ‘how is my business valued?’. Most businesses are valued based on a multiple of cash profit, though other methods may be used depending on the specific situation. The three main approaches to consider are as below:

1. Earnings Multiple (Most Common)

The most typical method uses cash profit, specifically EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortisation).

A normalised EBITDA is first calculated by adjusting for any one-off or exceptional items. This adjusted figure is then multiplied by a number between 2 and 10, depending on the business’s growth rate, size, and industry.

After the multiple is applied, cash held in the business is added and debt is deducted. This method is generally used for healthy, profitable companies.

2. Assets Less Debt

This method is suited to businesses with unreliable cash flows or those that own substantial assets such as property, land, or valuable equipment. A good example of this may be an agricultural business, it may own land and property, however, it’s income may be less regular than other businesses.  The Assets Less Debt method involves calculating the total value of the assets and subtracting outstanding debt, the results reflecting the tangible value of the business.

3. Discounted Cashflow

This approach is used when standard profit multiples don’t fit well. It is especially useful if the business generates stable cash, but is slowly declining, or receives steady, annuity-style income. This may apply for a subscription based business where growth has slowed down for example.

Using the discounted cashflow method involves estimating future cash flows and applying a discount rate to calculate what those future earnings are worth in today’s terms.

Ultimately, choosing the right valuation method depends on the financial profile of the business and its future prospects. Each approach offers a different perspective on value, helping determine what buyers might be willing to pay.

 

How Much is my Business Worth?

Let’s talk about something that can have a huge impact on what your business is worth: your profit level, specifically your EBITDA.

There’s a clear, proven relationship between profit and valuation multiple. The more profit your business makes, the more a buyer is typically willing to pay, not just in terms of total value, but in the multiple they’ll apply to your earnings. In other words, growing your business doesn’t just increase the size of the number, it can multiply it.

And here’s the big one: getting your business to £1m EBITDA can be a game-changer.

At around that level, you move into a completely different buyer pool. You’re no longer just appealing to small-scale acquirers. Suddenly, trade buyers, experienced entrepreneurs, and even private equity firms are interested. These groups are looking for businesses that are proven, stable, and scalable, and £1m EBITDA is often the magic number that signals that.

To give this some real-world perspective, let’s look at the multiples:

• A business doing £300k EBITDA might sell for 4.1x profit.
• At £500k EBITDA, you might get 5.8x.
• But at £1m EBITDA, that jumps significantly to 9.0x.

So while a £500k profit business might sell for £2.9 million, a £1m profit business could sell for £9 million.

This isn’t optimistic thinking, this statistic is based on data, and it’s why, when we’re working with owners looking to sell, we always ask: Can we get you to £1m EBITDA? Because if you can cross that line, even if it takes a couple of years, you’re suddenly playing a whole new game. Here’s how that looks on a graph:

 

What You Need for an Accurate Business Valuation

• 3–5 Years of Financials – Profit and loss, balance sheet, and cash flow accounts build the foundation.
• Management Accounts – Up-to-date figures show how the business is currently performing.
• EBITDA Breakdown – Clearly explain profit, adjusted for one-off or personal costs.
• Forecasts & Budgets – Evidence of expected growth or future performance.
• Normalisation Adjustments – Strip out personal, exceptional, or non-recurring costs and income.
• Ownership & Structure – Clarify company ownership, shareholding, and group/subsidiary details.
• Asset Register – List key business assets with valuations if needed.
• Revenue Breakdown – Show how income is split by product, customer, or contract.
• Customer Dependence – Highlight if the business relies heavily on a small group of clients.
• Debts & Liabilities – Detail any loans, leases, disputes, or financial obligations.
• Market Position – Explain your industry, competitors, and what sets you apart.
• Team & Leadership – Include key staff roles, any owner dependencies, and staff turnover.
• Bonus: Growth Story – Buyers pay more when there’s a clear and believable plan for future growth.

 

If I sell my business how much tax will I pay?

How much tax you pay when you sell your business will depend on how you decide to structure the sale. The structure you choose will depend on your goals for the sale. When selling a limited company, choosing between an asset sale (selling individual business assets like equipment, stock, property or goodwill) and a share sale (selling ownership stakes in the company) significantly affects how much tax is paid.

For sellers, it’s often preferable to go for a share sale, as gains are taxed via Capital Gains Tax (CGT), potentially reduced by reliefs without triggering corporation tax, avoiding double taxation.

Buyers, however, tend to favour asset sales since they can select which assets to purchase and avoid inheriting liabilities. Asset sales may incur corporation tax on any gains and additional tax when distributing proceeds to shareholders. Plus, buyers in asset deals may benefit from capital allowances, while sellers risk higher combined tax bills. Structuring deals with clear awareness of tax implications is essential to preserve value for both parties.

We dived into this topic in full detail here:

Understanding Tax When Selling a Business: Asset vs Share Sale

 

Finding the Right Buyer

While price is a major factor in any deal, it’s not the only thing that matters. Many business owners want to know their company will be in good hands after they exit.

Unlike larger firms that rely on listing sites and passive matchmaking, Paul Kaye, Owner of Transworld Business Advisors of South Bucks works closely with sellers, guiding them through the process and introducing them to buyers who align with their company’s values and future vision. For him, selling a business isn’t just a financial transaction, it’s about protecting the legacy an owner has built and ensuring it continues to thrive.

Choosing the wrong buyer can lead to complications, culture clashes, or even the deal falling apart during due diligence. That’s why it’s crucial to work with professionals who understand how to match businesses with the right buyers.

As Paul Kaye explains:

“The reality is that only about 10-20% of businesses that go to market actually get sold. That’s a tough truth, but it’s important for owners to understand. A lot of businesses don’t sell simply because they weren’t prepared properly or weren’t positioned the right way. Success in selling a business isn’t just about listing it and hoping for the best, it requires careful planning, realistic expectations, and making sure the business is ready for the market. It’s a process, not a gamble.”

If a broker is promising easy success without a tailored approach, it’s a red flag. The best brokers will take the time to understand your business, position it correctly, and actively seek the right buyer, not just the highest offer.

 

Do I need a solicitor to sell my business?

A good solicitor is an essential part of the process of selling a business, both in preparation for and during the sale. Engaging a solicitor as early as possible in your exit plan will give you the time to get your affairs in order and make your business as sale ready as possible.

Legal Preparation Before the Sale

The groundwork for a sale starts almost as soon as you set out on your business journey. However, the legal aspects of running a business and setting up in a way that protects you is often something that gets overlooked in the beginning.

 

Intellectual Property and Contracts

You’ve slaved over your business, you’ve created an offering that’s unique, maybe you’ve contemplated copyrighting or trademarking parts of your business in the past but never got round to it. When it comes to selling, having your trademarks and copyrights nailed down will give the next owner the peace of mind that a competitor won’t come along and steal your business idea.

The same goes for all of your contracts, that goes for contracts with suppliers, any service agreements and even your employee contracts. If this is something you’ve kept informal, you’ll definitely need this to be formalised.

What do we mean by that? Well for example, we once worked with a business who didn’t have any strict service agreements with their clients. Their client base was made up of businesses they’d worked with for over ten years, they’d built up trust and they never saw the need for any strict service agreements. However, if they had a disastrous day and all their clients handed their notice, they essentially wouldn’t have a business.

It sounds simple, but a surprising amount of business operate on goodwill and strong relationships with clients, but this counts for nothing to a new owner.

 

Shareholders’ Agreements and Company Governance

The same can be said for how your business is governed, and if you have shareholders, its critical to review your shareholders’ agreement (if one exists). If you haven’t considered it already, a shareholders’ agreement essentially sets out who owns what, how decisions are made, and what happens in the event of a sale.

Our solicitors will also examine your company’s Articles of Association and any other governance documents (e.g. board resolutions, share option agreements, director service contracts) to check for restrictions on transfers, drag-along/tag-along rights, or consent requirements. These can all affect how and whether a sale can proceed, and whether you need agreement from other parties before moving forward.

 

Due Diligence and Disclosure Preparation

Buyers will scrutinise your business from every angle: financials, contracts, leases, employment terms, tax compliance, and more. A solicitor helps you prepare for this by:

• Compiling all your relevant documents so they’re ready to give to the potential buyer’s solicitor.
• Compiling a Disclosure Letter to declare any risks or liabilities
• Ensuring nothing important is accidentally left out, which could expose you to legal claims later

 

Heads of Terms

Once you’ve found a serious buyer, you’ll usually put together a Heads of Terms document. This sets out the main points of the deal—such as the sale price, what’s being sold (shares or assets), the proposed timeline, and any conditions that need to be met before completion.

Although it’s not legally binding (except for specific clauses like confidentiality or exclusivity), it acts as a roadmap for the formal agreement to follow.

Importantly, it’s not to be confused with the final Sale and Purchase Agreement (SPA). The SPA is the full legal contract that binds both parties once signed. The Heads of Terms simply outlines what both sides intend to agree to, giving your solicitor a starting point for drafting the full deal.

A solicitor will help you make sure the document is worded carefully, with no room for misunderstanding, and that you’re not unintentionally committing to terms you haven’t fully thought through.

 

Legal Help During the Sale

Once you’ve found yourself a buyer, the process of due diligence starts. This is where your solicitor moves from preparing your documentation to assessing that the deal is legally sound in every aspect.

Drafting and Negotiating the Sale and Purchase Agreement (SPA)

The SPA is the core legal document that governs the sale and sets everything out. It includes the final price, what’s included in the deal, and the obligations of both the buyer and the seller are. Your solicitor will:

• Draft or review the SPA based on the agreed Heads of Terms
• Negotiate the scope and limits of warranties and indemnities (the promises you make to the buyer)
• Insert restrictive covenants if needed (e.g. non-compete clauses for example)
• Clarify how and when the purchase price will be paid (e.g. upfront, deferred, or subject to performance)
• Ensure you’re not taking on unreasonable liability after the deal closes

Completion and Post-Sale Obligations

Once everything is agreed, you’ll move to completion, the legal handover of the business. At this point, money changes hands and ownership transfers, it’s the final point after all your hard work.

But before you get too excited, you may still have legal obligations post-sale. These could include:

• Providing support during a handover or transition period
• Cooperating on final tax returns or closing down accounts
• Complying with ongoing restrictions (e.g. not poaching staff or working with former clients)

Your solicitor will manage the closing mechanics so that you know exactly what’s required of you after the sale.

 

How Long Does It Take to Sell a Business?

That depends on a few things: how well you’ve prepared, the condition of the business, how appealing it is to buyers, and whether there’s strong demand for what you do.

It’s a fair question, and one most business owners ask early on. While there’s no exact rule, most sales in the UK take somewhere between 6 and 9 months to complete. That covers everything from initial conversations and finding a buyer to negotiations, due diligence, legal work and final completion.

But every sale is different. Some go quicker, some take longer. A few of the things that can affect the timeline include:

• How large or complex the business is
• Whether your financials and paperwork are in good order
• What kind of interest you’re getting from buyers
• How motivated both sides are to move things along

If your business is well-organised, not overly reliant on you, and you’ve already done the legwork—cleaning up accounts, sorting contracts, preparing key documents—you’re in a much stronger position to move efficiently. A strong management team and recurring income can also speed things up, simply because they give buyers more confidence.

On the flip side, if everything lives in your head, the numbers don’t stack up cleanly, or the buyer gets cold feet during due diligence, you could be in for a longer process.

Selling a business takes time for a reason. There are a lot of moving parts and, for most owners, it’s a one-shot deal. With the right preparation and the right help, things can run smoothly—but there’s no fixed timeline, and it’s rarely a straight line from start to finish.

 

Mistakes to Avoid When Selling Your Business

Insights from a solicitor with 25 years’ experience in UK business sales, Rachel Duncan, the Legal Director here at Accounts and Legal:

Selling your business can be one of the most rewarding moments of your professional life, but it’s also where a lot of costly mistakes are made. Over the years, I’ve advised countless business owners through the process, and while every sale is different, the same issues crop up time and again.

If you’re thinking about selling, here are three common pitfalls that could hold you back or, worse, cause the deal to fall through.

1. Overvaluation

One of the most common mistakes is expecting too much. I understand the emotional connection involved. You’ve built the business, you’ve lived it. But buyers don’t value businesses based on sentiment. They’re looking at financial performance, recurring revenue, customer spread, operational risk, and whether the business can run without you.

Setting the price too high doesn’t impress serious buyers. It tends to put them off. The result is often a long time on the market, followed by price reductions, and ultimately a deal that could have been achieved much earlier with realistic expectations.

It’s important not to undervalue what you’ve built, but it’s just as important to back up your asking price with facts. A professional valuation, particularly one informed by market insight, will help you pitch things sensibly from the start.

2. Poor Documentation

A surprising number of deals collapse because of disorganised paperwork. If contracts are vague or unsigned, if employee agreements are informal, or if you can’t prove who owns your intellectual property, you’ll run into problems.

Buyers don’t want question marks. The more time they spend trying to make sense of things, the more cautious they become. This can lead to delays, price reductions, or withdrawal altogether.

Organising your documents properly gives you credibility. It makes the business easier to assess, easier to trust, and ultimately easier to sell.

3. Failing to Get Legal or Accounting Advice Early

Many business owners wait too long before involving a solicitor or accountant. Often, they come to us after terms have already been agreed or even after signing Heads of Terms. By then, much of the room to shape the deal has already gone.

Bringing in advisers early gives you a far better chance of spotting issues in advance. It means you can structure the deal in a way that works for you, avoid tax surprises, and protect yourself legally. It also helps smooth out discussions with the buyer, as many of their concerns can be addressed up front.

What looks like a saving by delaying professional advice usually ends up costing more, either in deal complications, last-minute legal fixes, or lost value.

Conclusion

Selling your business is one of the most significant financial and personal decisions you’ll ever make. It marks the end of one chapter and the beginning of another, but for that transition to be successful, it needs more than just good timing or a willing buyer. It needs structure, preparation, and the right advice at every stage.

The most successful sales we’ve seen have one thing in common: the business owner planned well in advance. They didn’t just wake up one day and decide to sell. They took time to get their accounts in order, tidy up contracts, put solid systems in place, and make sure the business could stand on its own without them. That kind of preparation doesn’t just make a sale easier, it makes the business more valuable.

It’s equally important is understanding what your business is actually worth and not over estimate. Buyers are looking for returns, not potential. Being realistic about valuation and backing it up with evidence, sets the right tone from the start and avoids disappointment, builds trust, and helps the deal move forward.

Choosing the right buyer is also just as important as the right price, whether it’s a competitor, an investor, or a new owner looking to take things further, the best deals happen when both sides share a vision for what comes next. You’re not just selling numbers, you’re handing over something you’ve built which naturally deserves care.

None of this happens in isolation though, legal, financial, and commercial decisions are all reliant on each other. Too often, owners delay getting the right advice until it’s too late, once offers are in, terms are agreed, or problems have already surfaced.

If you’re thinking about selling, whether it’s next year or five years from now, there is no time like the present, so get started in your preparation. Early advice isn’t just about documents and deadlines. It’s about making sure your business is ready, that you’re protected, and that you’re in control of the process from start to finish.

At Accounts and Legal, we’ve helped business owners through every stage of the sale journey from early-stage planning to final completion. Whether you’re ready to sell now or just exploring your options, we’re here to help you navigate it with confidence.

If you’d like a conversation about selling your business, just get in touch. We’re always happy to help.