Getting Your UK Company Ready for Sale: A Practical, No-Nonsense Guide

Preparing to sell a company is part art, part science, and entirely a process. Whether you’re typing “sell my business UK” into Google for the first time or you’ve already engaged a “business broker UK” to run a structured process, the groundwork you lay now will influence price, speed, and certainty of closing. This guide goes beyond the usual platitudes to give you the comprehensive, UK-specific preparation playbook—what must happen, what often gets in the way, and the less obvious moves that can add real value.

Start Earlier Than You Think: 12–18 Months Is Ideal

You can sell in three months if you must, but the best outcomes typically come from quietly preparing 12–18 months in advance. That time window lets you:

• Clean up your accounts and normalise earnings.

• Resolve “hairy” items—tax uncertainties, missing consents, loose IP ownership.

• Reduce dependency on you (the owner) by strengthening your second line of management.

• Shape the narrative and KPIs that buyers will pay for, rather than being stuck defending legacy metrics.

A longer runway also gives you enough trading periods to prove that improvements aren’t one-offs. Buyers pay for repeatable performance, not heroic sprints right before the sale.

Decide Your Deal Shape Early: Share Sale vs Asset Sale

In the UK, buyers often prefer asset deals to cherry-pick what they want and leave behind potential liabilities; sellers often prefer share deals for simplicity and tax outcomes. There’s no one-size-fits-all answer, but you should understand:

• Tax position: Business Asset Disposal Relief (formerly Entrepreneurs’ Relief) can reduce the CGT rate to 10% up to the lifetime limit if conditions are met. Check your personal position early; minor shareholding or employment tweaks can make or break eligibility.

• Contract assignability: Asset deals can trigger assignment or novation needs for customer/supplier contracts; share deals usually don’t—but change-of-control clauses still bite.

• Pensions, TUPE & employees: Asset sales may involve TUPE transfers; factor the timing, communications, and consultation obligations.

• Regulatory licences: Some licences and accreditations won’t cleanly transfer on an asset sale. Map these before you choose a route.

Agree the target structure with your tax adviser and solicitor before you go to market. If a buyer pushes for a different shape later, you’ll know the trade-offs and price adjustment required.

Financial Housekeeping That Actually Moves the Needle

Most blogs will tell you to “get your accounts in order”. Here’s what that really means in UK SME deals:

• Monthly management accounts that reconcile to statutory accounts: Clean, timely, and on a consistent accounting policy basis. If you’ve changed policies (e.g., revenue recognition), document the rationale and restate comparatives where sensible.

• Quality of Earnings (QofE) ready: Buyers (and their lenders) will run a QofE. Pre-empt it with a vendor-side QofE or at least a robust pack that:

  • Splits recurring vs non-recurring revenue.

  • Normalises EBITDA for owner remuneration, one-off legal costs, aborted projects, and exceptional items.

  • Separates project vs recurring revenue (e.g., SaaS subscriptions vs implementation fees).

  • Shows churn, retention, and net revenue expansion if you have recurring revenue.

• Working capital discipline: Expect a “cash-free, debt-free” deal with a negotiated “target working capital”. If you’ve artificially starved working capital pre-sale, you’ll pay for it on completion. Build a trail showing seasonality and a fair target based on a sensible average period.

• Debt-like items list: Beyond bank debt, debt-like items include VAT/PAYE arrears, corporation tax liabilities, lease obligations (IFRS 16 effects), deferred revenue, accrued holiday pay, dilapidations provisions, and director loan accounts. Make a full schedule so there are no surprises.

• Revenue quality and margin bridges: Provide SKU/customer profitability, channel mix, pricing history, and the logic for gross margin movements. Buyers love clean bridges that explain “why margins improved”.

Contracts: Your Hidden Valuation Lever

Two contract-related dynamics routinely derail value or timing:

• Change-of-control, assignment, and consent clauses: Map every material customer, supplier, landlord, and lender contract. Create a consent plan with clear owners and timelines. Secure waivers or side letters before launching the sale if possible.

• Term, pricing, and termination rights: Long-term, non-cancellable contracts at sensible margins are the gold standard. If renewals are imminent, prioritise renewals to lock in visibility—even if you give up a small pricing uplift. Visibility often matters more than absolute price to buyers and lenders.

Don’t forget the basics:

• Signed copies stored in one place (your data room).

• Schedules of key terms (term, termination, price escalators, rebates, exclusivities).

• Evidence of any variations and addenda—unsigned side deals are a diligence red flag.

People: De-risk Key Dependence and Tighten Documentation

Buyers pay a premium for businesses that don’t fall over when the seller goes on holiday. To show that:

• Build a second layer: Empower a COO, head of operations, or finance lead. If they’re new, prepare a succession memo and show how decision-making works without you.

• Employment contracts and handbooks: Ensure everyone has a signed contract, up-to-date job descriptions, intellectual property assignment clauses, confidentiality, and post-termination restrictions that are reasonable and enforceable.

• Status checks: Fix any IR35 and employment status risks; align contractors where appropriate; document rationales.

• Incentives: Consider implementing or cleaning up an EMI or other option scheme. Make sure options are validly granted (board minutes, valuations) and model pay-outs under different deal values. Misfiring options create friction at heads of terms.

• Pensions and compliance: Confirm auto-enrolment contributions and remedy any historic shortfalls early.

Intellectual Property and Technology: Own It, Prove It, Protect It

For tech-enabled or brand-driven businesses, IP ownership and hygiene are make-or-break:

• Assignments in place: Ensure all contractors and ex-employees have signed IP assignments. If not, fix it now; it’s much easier than trying to fix it mid-deal.

• Domains and social accounts: Confirm they’re registered to the company, not a founder or agency. Transfer if needed.

• Open-source compliance: Produce a short software bill of materials and licence summary. Clarify any copyleft exposure and remediation steps.

• Cybersecurity and data: Basic policies (access controls, backups, MFA), incident logs, and penetration test results demonstrate maturity. If you handle personal data, maintain a RoPA (Record of Processing Activities) and show GDPR compliance in practice (DSAR handling, retention schedules, DPA with processors, UK SCCs as needed).

Tax, Grants, and Credits: Avoid the “Clawback Surprise”

HMRC matters can scupper confidence late in the process:

• R&D tax credits: If you’ve claimed, keep the technical narratives and cost schedules. Where borderline, consider an external review. Buyers fear HMRC clawbacks.

• VAT and PAYE: Clear arrears, agree time-to-pay if necessary, and document compliance. Payroll anomalies (benefits, expenses, off-payroll workers) should be rectified.

• Capex vs repairs: Ensure consistent treatment; large reclassifications just before sale raise eyebrows.

• Share capital and EIS/SEIS history: Get records straight. Previous EIS rounds require careful handling to avoid investor tax consequences on a share sale.

Property and Real Estate: Don’t Let Leases Delay Completion

Whether you own or rent:

• Title, consents, and charges: Make sure freehold titles are clean, charges registered/satisfied as appropriate, and there are no historic restrictions lurking.

• Leases: Prepare for landlord consents or authorised guarantee agreements (AGAs). Start discussions early; lease assignment processes are a common critical path item.

• Dilapidations and H&S: Commission a quick desktop view of likely dilapidations and have your H&S documentation (risk assessments, fire safety) ready.

Insurance and Litigation: Prove You’re Covered and Safe

• Insurance: Keep policies in force (PL, EL, PI, cyber) with adequate limits. Obtain confirmation of run-off availability, especially if you’re planning an asset sale.

• Claims and disputes: Disclose all ongoing or threatened claims with correspondence and a short summary. Buyers hate surprises; frank disclosure, supported by advice, preserves trust.

Build the Valuation Narrative with Evidence

Price is what someone pays; value is what you demonstrate. Package your story around:

• Quality of earnings and growth levers: Cohort retention, upsell programmes, price realisation, and sales pipeline conversion. Show levers that are under the buyer’s control post-deal.

• Concentration risks and mitigation: If you have a top-three customer concentration, present a plan (or progress) diversifying. Show active prospecting in adjacent segments.

• Moats and switching costs: Document integrations, proprietary processes, accreditation barriers, or exclusive partnerships that make revenue sticky.

• Unit economics: LTV:CAC for subscription models, utilisation for professional services, OEE/throughput for manufacturing. Buyers buy cash flow they can model.

Choose the Right Advisors (and Understand Their Incentives)

When you search “business broker UK”, you’ll find everything from sole finders to full-service corporate finance boutiques. Consider:

• Sector specialism: You’ll get better buyer coverage and positioning with advisors who live in your sector.

• Fee structure: Success fees, retainers, minimum fees, and “tail” periods. Ensure there’s a clear definition of “Introduced Party”.

• Scope: Who drafts the teaser and information memorandum? Who runs the due-diligence Q&A? How are overseas buyers handled?

• Regulatory status: Ensure that any regulated activities are appropriately covered; mis-steps here can delay completion.

You’ll also need an M&A-experienced solicitor who acts pragmatically, a tax adviser who models different structures clearly, and—if you’re going for a premium outcome—a vendor QofE provider to reduce friction.

Prepare a Buyer-Ready Data Room

A strong data room shortens diligence and builds confidence. Structure it clearly:

1. Corporate and cap table: Articles, statutory registers, PSC, shareholder agreements, minutes, option schemes.

2. Financials: Statutory accounts, management accounts, forecasts, QofE pack, working capital analyses, debt-like item schedule.

3. Tax: Returns, VAT/PAYE records, R&D claims, correspondence with HMRC.

4. Commercial: Contracts (customers, suppliers, key partners), pipeline, pricing policies, rebates.

5. People: Contracts, policies, handbooks, org chart, incentives, IR35 assessments.

6. Legal and compliance: GDPR documentation, licences, accreditations, H&S, insurance.

7. IP and tech: Registrations, assignments, code ownership summaries, cyber posture.

8. Property: Freehold titles, leases, consents, surveys.

9. Litigation and disputes: Summaries and correspondence.

10. ESG and sustainability: Modern slavery statements where applicable, supply-chain policies, carbon or waste reporting if relevant.

Redact sensitive customer names early in the process if you must, but be prepared to unredact under NDAs as buyers move forward.

Heads of Terms: Lock in the Big Rocks

Your heads should be specific on the terms that matter most:

• Price and structure: Cash, rollover equity, vendor loan notes, earn-out.

• Completion mechanism: Locked-box (with leakage protection) vs completion accounts (with a clear working capital target).

• Net debt and debt-like definitions: Spell them out now to avoid arguments later.

• Warranties, caps, and escrows: Agree commercial parameters early; consider W&I insurance to de-risk where appropriate.

• Restrictive covenants and handover: Define your post-sale role and reasonable non-competes/non-solicits.

• Exclusivity (no-shop) and timetable: Keep the process moving and stop “shopping the deal” once you commit.

Locked-Box vs Completion Accounts: Pick What Suits Your Business

• Locked-box: Price fixed off a historic balance sheet date with a “no leakage” covenant. Great when earnings are stable and cash generation is predictable. You keep cash generated between the locked-box date and completion (subject to permitted leakage).

• Completion accounts: Price trued-up at completion based on actual cash, debt, and working capital. Better if performance or working capital is volatile, but it extends post-completion wrangling. If you choose this, invest in a clean month-end close so you can produce numbers quickly.

Earn-Outs and Deferred Consideration: Design for Success, Not Stress

Earn-outs can bridge value gaps, but design them carefully:

• Simple metrics: Revenue or gross profit are simpler than EBITDA, which can be distorted by post-deal cost allocations.

• Control and consistency: Define what the buyer can and cannot change (pricing, marketing budget, product lines) during the earn-out period.

• Payment security: Use escrow, bank guarantees, or step-in rights where appropriate, especially if you’re accepting vendor loan notes or long deferrals.

• Tax clarity: Model the tax timing and character of each element—cash, loan notes, and earn-out—so you know your real after-tax proceeds.

Communications: Keep Calm and Carry On

Leaks destroy value. Plan communications:

• Internal: Tell staff on a need-to-know basis until late in the process. Have retention letters ready for key people.

• Customers and suppliers: Pre-wire your most important relationships; line up change-of-control consents; reassure on continuity.

• Regulators and landlords: Submit consents early; regulatory queues and landlord approvals are classic deal-slowers.

Pitfalls That Commonly Derail UK SME Deals (and How to Avoid Them)

• Out-of-date statutory registers and missing share certificates: Reconstruct using Companies House filings and legal opinions. Fix before diligence.

• Owner’s personal expenses through the company: Normalise them cleanly and stop doing it in the final year; buyers will assume there’s more if they see some.

• R&D claims with weak documentation: Shore up narratives or proactively restate if necessary; uncertainty kills appetite.

• GDPR non-compliance: Create a data map, DPA schedule, breach log, and DSAR process. It’s basic hygiene that buyers expect.

• Unassignable key contracts: Negotiate consents or re-paper critical accounts. If a top customer refuses, expect a price chip or earn-out.

• Lease consents lagging: Start landlord conversations early and prepare AGAs or rent deposits if needed.

• Unclear net debt definitions: Put it in heads. Spell out treatment of deferred revenue, lease liabilities, director loans, and accrued bonuses.

• Working capital games: Buyers will spot pre-sale cash harvesting or supplier bullying. Present balanced, seasonally fair targets.

• Late valuations or messy option schemes: Clean up EMI paperwork and fully diluted cap table before going to market.

• Trying to sell while firefighting: If there’s a live crisis (major dispute, product failure), pause the sale, fix it, then return. Distressed sales rarely get full value.

The Sale Process: Broad Auction vs Targeted vs Bilateral

• Broad auction: Maximises price via competitive tension but requires more preparation and capacity to manage multiple bidders.

• Targeted process: A curated list of logical buyers can be just as effective if you have clear strategic fits.

• Bilateral negotiation: Fastest and often most confidential, but you need strong valuation anchors (comparables, QofE) to avoid leaving money on the table.

A seasoned “business broker UK” or corporate finance adviser will guide you on the right route. Whichever path you choose, keep a weekly cadence of actions, decisions, and data room updates. Deals slow down when sellers stop answering questions.

The “Obvious” Tips—Done Properly

• Information Memorandum (IM): Not a brochure; it’s a financial and operational argument for value. Make it data-rich and honest about risks with credible mitigations.

• Forecasts: Bottom-up, reconciled to hiring plans, capacity, and marketing activity. Link to KPIs you already report, not wishful thinking.

• KPI dashboard: Publish the same set monthly for at least six months pre-sale to demonstrate consistency.

• Adviser brief: Align all advisers on the story, redlines, timing, and what you will/won’t accept in heads.

The Less-Obvious, High-Impact Moves

• Reverse reference programme: Quietly line up two or three customers who will take reference calls and say the same good things—reliability, responsiveness, measurable outcomes.

• Pricing audit: Where you have legacy underpriced customers, rationalise gently months before the process. Demonstrating price discipline signals maturity and expands margin headroom.

• “Owner holiday test”: Take a real two-week break pre-sale. If the business runs smoothly and you can show that, it’s proof you’re not a single point of failure.

• Shadow integration memo: Draft a one-pager on “what a buyer could do in the first 100 days”. This helps strategics and PE funds visualise synergy capture—often worth an extra turn of EBITDA.

• Mini vendor-due-diligence (VDD): Even a light-touch VDD on financials and tax cuts weeks off diligence and reduces price chips.

• Pro-forma legal pack: Prepare draft disclosure letter indices and a schedule of known issues with proposed cures. It frames negotiation around solutions, not problems.

• Covenant modelling: If your likely buyer is debt-funded, present a simple covenant model showing headroom. You’re doing the lender’s job for them—de-risking the deal.

A Simple Pre-Sale Checklist

• Up-to-date statutory registers, PSC, Articles, and cap table.

• Clean monthly management accounts; QofE pack; debt-like and working capital schedules.

• Customer and supplier contract summaries; consent plan for change-of-control/assignment.

• People files complete; IR35 review; incentives/EMI clean-up; org chart.

• GDPR pack: RoPA, DPAs, retention, incidents, DSAR process.

• IP assignments; domain and social ownership; open-source licence summary.

• Property titles/leases; landlord consent path; H&S docs.

• Tax: VAT/PAYE/CIT status; R&D documentation; HMRC correspondence.

• Insurance: PL/EL/PI/cyber; claims history; run-off options.

• Data room indexed and tested; teaser and IM drafted; referenceable customers prepared.

• Heads of terms template with your preferred positions.

What to Expect on the Home Stretch

• Buyer diligence Q&A: Set weekly priorities; answer with evidence; keep a log of what’s outstanding and who owns it.

• SPA negotiation: Focus on the big-ticket items—price mechanics, warranties/indemnities, caps/escrows, restrictive covenants, and post-completion obligations.

• Disclosure: Over-disclose sensibly with documents and clear narratives. Surprises after signing become indemnity claims.

• Completion weekend: Align accountants, lawyers, and your internal team on funds flow, releases of security, and communications. Rehearse the steps—completion is choreography.

When You Shouldn’t Sell (Yet)

• You’re in the middle of a major product recall or regulatory investigation.

• One customer is more than 40% of revenue and at risk of churn.

• Your finance function can’t produce reliable monthly numbers within 10 working days.

• You (personally) still hold most of the sales relationships and haven’t done a proper handover to a team.

• You’ve just completed a risky R&D claim and aren’t fully confident in the underlying technical narrative.

Fix these and you’ll command a much stronger valuation and cleaner deal.

Final Thought: “Sell My Business UK” Is a Process, Not a Moment

If you take nothing else from this guide, remember this: buyers pay for durable, well-documented, transferable cash flows. Everything you do—tidy finances, robust contracts, strong teams, clean compliance, credible growth levers—serves that single goal. With the right preparation, you don’t just sell faster; you sell better.

How Lexis Capital Group Can Help

If you’re ready to take the next step and want a seasoned partner rather than a spectator, Lexis Capital Group combines advisory, operational, and legal expertise to get UK owners from “thinking about a sale” to “closed”. We can act as your “business broker UK” for a structured market process or explore a direct acquisition if speed and confidentiality are priorities. We specialise in situations traditional brokers often avoid—shareholder disputes, succession handovers, contract or HR tangles—bringing hands-on stabilisation and growth planning that helps buyers (or us) underwrite value with confidence. From pre-sale housekeeping and QofE preparation to targeted buyer outreach, diligence management, heads of terms, and completion mechanics, we guide the process end to end with a clear plan, fixed milestones, and pragmatic negotiation. If you’re considering a sale in the next 6–18 months, let’s talk early. The right preparation can add real, measurable value to your outcome. To contact Lexis call us on 0203 693 3803