TL;DR. Selling a UK business is a sequence of documents, each of which locks in part of the deal: an anonymous teaser, an NDA, an information memorandum, heads of terms, a due diligence data room, the sale agreement and the disclosure letter. Most sales take six to twelve months, and most value is won or lost in preparation and in the heads of terms, not at the completion meeting. For a share sale from 6 April 2026, Business Asset Disposal Relief taxes up to £1 million of lifetime gains at 18%, so check you qualify at least two years before you sell.
This guide is for owners of UK limited companies and their advisers. It follows a sale in the order it happens, says what each stage produces, and links to the free tools that draft each document. Sole traders and partnerships sell assets rather than shares, so the share sale sections apply to them only in part.
Draft the documents as you go. No email, no signup.
- M&A teaser deck template: the anonymous first approach to buyers.
- NDA template builder: a UK NDA for a business sale, with a click-to-accept version.
- Heads of terms builder: price, payment, exclusivity and the binding clauses, as a Word file.
- M&A data room index builder: the folders a buyer's solicitor expects in due diligence.
How do you sell a business in the UK?
A sale of a UK company runs through eight stages. The timings below are typical for an owner-managed business selling to a trade buyer; a well prepared business moves faster, and a business that needs tidying first adds months at the start.
| Stage | What happens | Typical length | What it produces |
|---|---|---|---|
| 1. Prepare | Accounts, records, contracts and tax put in order | 3 to 12 months | Clean accounts, an organised document set |
| 2. Value | Adjusted profit and a price range worked out | 2 to 4 weeks | A valuation and a minimum acceptable price |
| 3. Choose how to sell | Buyer types and advisers chosen | 2 to 4 weeks | An engagement with an adviser, a buyer list |
| 4. Approach buyers | Teaser, NDA, information memorandum, meetings | 1 to 3 months | Signed NDAs, indicative offers |
| 5. Agree terms | Offers compared, heads of terms signed | 2 to 6 weeks | Heads of terms, exclusivity |
| 6. Due diligence | The buyer’s advisers investigate the business | 4 to 12 weeks | A data room, answered questions, a report |
| 7. Sale agreement | The contract and disclosure letter negotiated | Alongside due diligence | Signed SPA and disclosure letter |
| 8. Complete | Money paid, shares or assets transferred | 1 day, then handover | Completion, filings, a tax return entry |
The rest of this guide takes each stage in turn.
Step 1: Prepare the business before you go to market
Buyers price risk. Everything you fix before a buyer sees it is a risk they cannot use to reduce the price later, and preparation is the only stage that is entirely on your timetable.
Accounts. Have three years of filed accounts and monthly management accounts up to the latest month end. Buyers value on profit, so work out adjusted EBITDA: earnings before interest, tax, depreciation and amortisation, with one-off costs and the owner’s personal choices added back, such as a salary above or below the market rate for the role, or a one-off legal bill. Every adjustment needs evidence, because the buyer’s accountant will test each one.
Owner dependency. A business that only works because you are in it is worth less, and buyers protect themselves with earn-outs and long handovers. Put key customer relationships, supplier terms and know-how in the hands of a second person well before the sale.
Contracts. Read your largest customer and supplier contracts for change of control clauses, which let the other side end the contract if the company is sold. Note how much revenue depends on your top five customers; heavy concentration is one of the first things a buyer will raise.
Company records. Check that the register of members, the people with significant control register and Companies House all show the same shareholders and share numbers, that every allotment and transfer was filed, and that board minutes and shareholder resolutions exist for major decisions. Missing filings are cheap to fix now and alarming in due diligence.
Intellectual property. Make sure the company, not you or a contractor, owns its software, designs, brand and domain names. Code written by freelancers belongs to them unless it was assigned in writing.
People. Every employee needs a written contract. Check right to work records, pension auto-enrolment and any contractors who look like employees.
Property. Find the leases and check whether a sale needs the landlord’s consent.
Tax. Ask your accountant to confirm you qualify for Business Asset Disposal Relief and will still qualify on the sale date (the conditions are below). HMRC also looks at whether the company is mainly trading: large cash balances or investment property can put that at risk. HMRC’s manual says that where non-trading income and assets are no more than 20% of the totals, a closer review is unlikely to be needed, but the indicators are weighed together rather than applied as a strict limit.
Documents. Start collecting what a buyer will ask for now, not when the request list arrives. Lay it out in the order a buyer’s solicitor expects with the free M&A data room index builder, and our M&A data room guide for UK founders covers what goes in each folder.
Step 2: Work out what the business is worth
Most profitable UK small and medium-sized businesses are valued on a multiple of adjusted EBITDA. The multiple reflects risk and growth: recurring revenue, a broad customer base, a management team that does not depend on the owner, and a growing market all push it up. Businesses with little profit or a lot of assets are valued differently.
| Method | Used for | How it works |
|---|---|---|
| EBITDA multiple | Most profitable trading businesses | Adjusted EBITDA times a multiple drawn from comparable deals |
| Revenue multiple | Fast-growing or subscription businesses with low profit | Annual or recurring revenue times a multiple |
| Asset-based | Property, investment or asset-heavy businesses, or loss-making ones | Net assets at market value |
| Discounted cash flow | Larger businesses with reliable forecasts | Future cash flows discounted to today |
The multiple gives the enterprise value: the value of the business with no cash and no debt. What you receive is the equity value, after the cash in the business is added, its debt is subtracted, and the working capital is adjusted to a normal level. Most offers are made on this cash-free, debt-free basis.
A worked example, with an illustrative multiple:
| £ | |
|---|---|
| Reported EBITDA | 520,000 |
| Add back owner’s salary above the market rate | 60,000 |
| Add back one-off legal costs | 20,000 |
| Adjusted EBITDA | 600,000 |
| Enterprise value at 5 times adjusted EBITDA | 3,000,000 |
| Add surplus cash | 400,000 |
| Subtract the bank loan | (250,000) |
| Equity value before the working capital adjustment | 3,150,000 |
Use the valuation to set a price range and a walk-away figure before you meet buyers. An accountant or corporate finance adviser can give you comparable deal multiples for your sector.
Step 3: Decide who could buy it, and who will run the sale
Who buys UK businesses.
- Trade buyers: competitors, customers, suppliers or companies wanting to enter your market. They often pay the most because they can save costs or sell more after buying you, and they usually want you to hand over rather than stay long term.
- Private equity: investment funds buying a majority stake, usually in larger businesses with established profits. They often want management to stay and roll over part of their proceeds into the new structure.
- Management buyout (MBO): your own managers buy the company, usually with bank or private equity funding. They already know the business, but the price depends on how much they can borrow.
- Employee ownership trust (EOT): the company is sold to a trust for the employees, usually paid for over several years from the company’s profits. For disposals from 26 November 2025, half the gain on a sale to an EOT is relieved from Capital Gains Tax, down from all of it.
- Individual buyers: people buying a business to run, common for smaller businesses and often funded partly by the seller through deferred payments.
Who runs the sale. A business broker lists smaller businesses, finds buyers and handles the first approaches. A corporate finance or M&A adviser runs a managed process for larger businesses: preparing the information memorandum, approaching a targeted list of buyers and negotiating. Either way you will need a corporate solicitor for the sale agreement and an accountant for tax and, often, the financial due diligence questions. Advisers usually charge a success fee as a percentage of the price, sometimes with a retainer. Be wary of large upfront fees that are not linked to a completed sale.
Step 4: Approach buyers without the news leaking
A leak can cost you staff, customers and negotiating position, so information is released in stages, each one only after the buyer has shown more commitment.
- Teaser. A one or two page anonymous summary: sector, region, revenue and profit ranges, what makes the business attractive, and why the owner is selling. It goes to a list of possible buyers. The free M&A teaser deck template gives you the structure.
- NDA. Buyers who want more sign a non-disclosure agreement before they learn the company’s name. For a sale it should cover the fact that talks are happening, stop the buyer approaching your staff, customers and suppliers, and stop them hiring your people for a period. The NDA template builder produces a UK sale NDA with those clauses.
- Information memorandum. A detailed document on the business, its history, customers, team, financials and growth plans, shared under the NDA.
- Management meetings and site visits. Serious buyers meet you, often away from the office or out of hours.
- Indicative offers. Buyers send non-binding offers with a price range and their main conditions.
Share the information memorandum and early financials through a data room rather than email attachments, so you control who can open what and can see which buyers are reading. Tell one or two key managers once a buyer is serious, because the buyer will want to meet them; most sellers tell the wider team at or just before completion.
Step 5: Compare the offers and agree heads of terms
The highest headline price is not always the best offer. Compare how much you receive at completion, how much depends on future events, and how certain the buyer’s funding is.
| Offer A | Offer B | |
|---|---|---|
| Headline price | £3,000,000 | £3,400,000 |
| Cash at completion | £2,700,000 | £2,000,000 |
| Retention, released after 12 months if no claims | £300,000 | None |
| Deferred payment over 12 months, unsecured | None | £400,000 |
| Earn-out over 2 years, measured on EBITDA | None | Up to £1,000,000 |
| Money you receive without hitting any target | £3,000,000 | £2,400,000 |
Offer B is only worth more if the earn-out pays out in full and the buyer can pay the deferred amount. Earn-outs are where most post-sale disputes come from, so if you accept one, define the measure, the accounting policies and what the buyer may not do to the business during the earn-out period.
Once you choose a buyer, the agreed terms go into heads of terms: price and how it is adjusted, how and when it is paid, the conditions, the due diligence timetable, your role after the sale, and exclusivity, the period in which you agree not to talk to other buyers. Most of the document is not binding, but it frames everything after it. Keep exclusivity short, with an early end if the buyer reduces the price, and settle the price mechanism here rather than in the contract. Our guide to heads of terms goes clause by clause, and the heads of terms builder drafts them and flags the terms that cost sellers most.
Should you sell shares or assets?
This choice changes your tax, what happens to your staff, and which contracts move with the business. It should be settled by heads of terms at the latest.
| Share sale | Asset sale | |
|---|---|---|
| What is sold | The shares in the company, so the buyer takes the company as it is | Chosen assets: equipment, stock, contracts, goodwill |
| Who is paid | The shareholders | The company |
| Seller’s tax | Capital Gains Tax on the shares; Business Asset Disposal Relief may apply | The company pays corporation tax on its gains, then the owners pay again when they take the cash out |
| Employees | Stay employed by the same company | Transfer to the buyer automatically on their existing terms under TUPE |
| Contracts | Stay with the company, subject to change of control clauses | Usually need each counterparty’s consent to transfer |
| Past liabilities | Stay with the company, so the buyer asks for warranties and indemnities | Mostly stay with the seller’s company |
| VAT | No VAT on the shares | Usually outside VAT if the sale qualifies as a transfer of a going concern |
| Stamp duty | 0.5% of the price, paid by the buyer | Stamp duty land tax, or the Scottish or Welsh equivalent, on any land and buildings transferred |
Owners of limited companies usually prefer a share sale, mainly for tax. Buyers of smaller businesses often prefer an asset sale, because they can leave liabilities behind. Where the buyer insists on assets, the price should reflect the extra tax you pay.
Step 6: Get through due diligence
After heads of terms, the buyer’s accountants and solicitors investigate the business. Expect a request list of a hundred or more items across financial, tax, legal, commercial, employment, IT, property and, where relevant, environmental matters, followed by rounds of written questions.
Three things decide how this stage goes:
- Speed. Exclusivity is running. Every week spent finding documents is a week the buyer has to find reasons to renegotiate. Sellers who open a ready data room on the day heads of terms are signed keep control of the timetable.
- Organisation. A data room laid out in the order of the request list, with sensible folder and file names, lets the buyer’s advisers work without chasing you. The M&A data room index builder gives you a UK structure, and our due diligence data room guide explains the stages.
- Disclosure. Problems found by the buyer reduce the price. Problems you disclose, in the data room and later in the disclosure letter, protect you from warranty claims after completion. Disclose early and in writing.
Keep a record of what was shared and when. If there is a dispute after completion about what the buyer knew, a data room with an audit log is the evidence.
Step 7: The sale agreement, warranties and the disclosure letter
The buyer’s solicitor usually drafts the share purchase agreement (SPA), or an asset purchase agreement for an asset sale. Its main parts:
- Price and adjustments. Either a locked box, where the price is fixed on a past balance sheet and you promise no value has left the business since, or completion accounts, where the price is adjusted after completion for the actual cash, debt and working capital.
- Warranties. Statements of fact about the business, such as that the accounts are accurate and there are no undisclosed disputes. If one is untrue and the buyer suffers a loss, they can claim against you.
- Indemnities and the tax covenant. Promises to repay specific losses pound for pound, most commonly any tax that relates to the period before the sale.
- Limitations. Your protection: a cap on total claims, often a percentage of the price for general warranties, a time limit for claims, commonly 18 to 24 months for general warranties and up to seven years for tax, and minimum thresholds below which no claim can be made.
- Restrictive covenants. How long you must not compete with the business, solicit its customers or hire its staff.
Alongside the SPA, your solicitor prepares the disclosure letter, which lists exceptions to the warranties. Anything fairly disclosed in it cannot found a warranty claim, which is why disclosure matters as much as the warranties themselves. On larger deals the buyer may take out warranty and indemnity insurance, which moves much of the warranty risk from you to an insurer.
Step 8: Completion and after the sale
At completion the documents are signed, usually electronically, the buyer pays the completion money, and for a share sale you sign stock transfer forms for your shares. The buyer pays stamp duty of 0.5% on the price of the shares. Then:
- Companies House. Director appointments and resignations must be reported within 14 days, and the people with significant control register updated and filed when control changes. Appoint new directors before the old ones resign.
- Registers. The register of members is updated to show the new shareholders.
- Lenders. If you gave a personal guarantee or security over your home for company borrowing, make sure it is released at completion.
- HMRC. You report the gain on your Self Assessment return for the tax year of the sale and pay the Capital Gains Tax by 31 January after that tax year ends. The deadline to claim Business Asset Disposal Relief is the first anniversary of that date; for a sale in the 2026 to 2027 tax year, that is 31 January 2029.
- Handover. Work through the agreed handover period, and if there is an earn-out, keep copies of the accounts it is measured on.
How much tax will you pay when you sell your business?
For an individual selling shares in their own trading company, the gain is the sale price less what you paid for the shares and your costs of selling. It is taxed under Capital Gains Tax. The figures below are for the 2026 to 2027 tax year, from HMRC’s published guidance.
| Rate from 6 April 2026 | |
|---|---|
| Gains qualifying for Business Asset Disposal Relief, up to £1 million over your lifetime | 18% |
| Other gains within your basic rate band | 18% |
| Other gains above your basic rate band | 24% |
| Annual exempt amount | £3,000 |
Business Asset Disposal Relief (BADR), formerly Entrepreneurs’ Relief, rose from 10% to 14% for disposals from 6 April 2025 and to 18% from 6 April 2026. To qualify when selling shares, for at least two years up to the sale:
- the company must be your personal company: you hold at least 5% of the shares and the voting rights, and are entitled to at least 5% of the distributable profits and assets on a winding up, or of the proceeds if the company is sold;
- you must be an employee or officer of the company or of a company in the same group;
- the company must be a trading company, or the holding company of a trading group.
Because the BADR rate now equals the basic rate of Capital Gains Tax, the relief mainly helps higher and additional rate taxpayers, and is worth at most £60,000: 6% of £1 million. A worked example for a higher-rate taxpayer with a £2.5 million gain on a share sale who has not used any of their lifetime limit:
| With BADR | Without BADR | |
|---|---|---|
| First £1,000,000 | £180,000 at 18% | |
| Remaining £1,500,000, less the £3,000 exempt amount | £359,280 at 24% | |
| £2,497,000 at 24% | £599,280 | |
| Total Capital Gains Tax | £539,280 | £599,280 |
Points to raise with your accountant before you agree the deal structure:
- Deferred payments and earn-outs can create a tax bill on money you have not yet received, depending on how they are structured.
- Asset sales are taxed twice: corporation tax in the company, then income tax or Capital Gains Tax when you extract the proceeds, for example by liquidating the company.
- Sales to an employee ownership trust from 26 November 2025 are relieved on half the gain, with the other half chargeable.
- Non-trading assets such as surplus cash or investment property can threaten trading status and therefore BADR.
Tax depends on your circumstances. Treat this section as a guide to the questions to ask, not as advice.
Selling a business checklist
Before you go to market
- Three years of filed accounts and up-to-date monthly management accounts
- Adjusted EBITDA with evidence for every add-back
- Statutory registers, Companies House filings and share capital reconciled
- Intellectual property assigned to the company in writing
- Written contracts for every employee; contractors reviewed
- Change of control clauses and landlord consents identified
- Business Asset Disposal Relief eligibility confirmed with your accountant
- A valuation, a price range and a walk-away figure
- Documents collected into a data room index
When you approach buyers
- Broker or adviser appointed, with fees tied to completion
- Anonymous teaser written
- NDA signed by every buyer before the company is named
- Information memorandum shared through a data room, not email
- Key managers told once a buyer is serious
At heads of terms
- Offers compared on cash at completion, not headline price
- Share or asset sale decided, with the tax effect known
- Price mechanism chosen: locked box or completion accounts
- Earn-out measures and accounting policies defined, if there is one
- Exclusivity short, with an early end if the price is cut
During due diligence and the sale agreement
- Data room open the day heads of terms are signed
- Questions answered in writing within agreed times
- Problems disclosed early and recorded in the disclosure letter
- Warranty caps, time limits and thresholds agreed
- Restrictive covenants limited to what protects the business
At and after completion
- Personal guarantees released
- Director, shareholder and people with significant control changes filed
- Gain reported on your Self Assessment return and BADR claimed
- Handover and earn-out obligations diarised
The mistakes that cost sellers most
- Going to market before the accounts are ready. Buyers turn every unexplained number into a price reduction or a longer earn-out.
- Letting the buyer set the timetable. Long exclusivity with no early exit gives the buyer time to renegotiate after you have turned other buyers away.
- Judging offers on the headline price. A larger offer made mostly of earn-out can pay less than a smaller cash offer.
- Finding out about BADR too late. The conditions must be met for two years up to the sale, so a missing 5% or a lapsed directorship cannot be fixed in the final months.
- Disclosing late. A problem the buyer finds in due diligence costs more than the same problem disclosed at the start.
- Losing control of information. Documents emailed to several buyers cannot be withdrawn, and you cannot tell who read what.
How Beamprobe fits
Beamprobe is a UK virtual data room for the stages of a sale where documents leave your hands: the information memorandum, the due diligence request list and the questions that follow. Each buyer and adviser gets their own link, so you can see which documents each one opened and for how long, and withdraw access when a buyer drops out. Pro adds an NDA gate in front of the room and watermarked documents, with UK/EU data residency, from £29 a month and no per-user fees.
Not ready to open a room yet? Start with the free M&A data room index builder and work through the folders before a buyer asks.