How to sell a business in the UK: Steps for a successful sale

Published Sunday 5 October 2025

Table of contents

• How to sell a business
• Making a plan to sell your business
• Prepare your documentation
• Get your business valued
• Find a buyer
• Manage the offer
• Conduct your due diligence
• Change ownership
• Set yourself up for a successful sale with Xero
• FAQs on selling a business

Key takeaways

• Begin planning your business sale 12-24 months before your intended exit date to avoid rushed decisions, capture unexpected opportunities, and improve your business value through the preparation process.

• Prepare comprehensive documentation including three years of financial statements, supplier agreements, customer contracts, and detailed internal process manuals to streamline due diligence and attract serious buyers.

• Obtain a professional business valuation using asset-based, earnings-based, or market-based methods, and consult with your accountant early about tax implications to structure the sale in the most tax-efficient way possible.

• Start your buyer search with internal candidates like family members or employees, then expand to network referrals through professional advisors, and finally consider external services like business brokers or online marketplaces for wider exposure.

How to sell a business

Selling a business is the process of transferring ownership of your company to a buyer in exchange for payment. Whether you're retiring, changing careers, or pursuing new opportunities, understanding the seven-step process helps you achieve the smoothest and most profitable transition.

1. Make a plan to sell your business

should begin 12-24 months before your intended exit date. This is particularly important for tax purposes, as to claim certain reliefs, you must meet qualifying conditions throughout a period of 2 years. Starting early provides three key advantages:

• Avoid rushed decisions: You'll have time to find the right buyer at the right price
• Capture unexpected opportunities: You can respond quickly to unsolicited offers
• Improve business value: The preparation process reveals areas for improvement that boost sale price

Work with your accountant, bookkeeper or tax advisor to get your documentation in order and make the sale tax-efficient. If you need an accountant or bookkeeper, find one in the Xero advisor directory.

2. Prepare your documentation

Documentation preparation involves gathering three years of comprehensive business records. This typically takes 3-6 months, so start early. You'll need complete documentation in three critical areas:

Financial statements

Buyers will want to see three years of financial records. You’ll need profit and loss statements to show your business makes money, balance sheets to show the value of your equipment, property and inventory against your debts, and cash flow statements to confirm your business generates cash from operations.

Supplier agreements and customer contracts

Renew key agreements with customers and suppliers, especially those critical to your business. Secure written contracts with major clients and suppliers.

Internal processes

Document your business processes. Write down how your business operates, who is responsible for each task, the order of operations, and the systems you use. Create a manual to help a new owner run the business smoothly. Ask employees to document the parts relevant to their roles.

3. Get your business valued

determines your company's fair market value using professional assessment methods. You have two main options for getting your business valued:

• Accountant valuation: Best for sales to known buyers (employees, family members)
• Broker valuation: Essential when you need to find external buyers, as brokers also handle marketing

3 methods of business valuation

Business valuation methods fall into three categories:

• Asset-based valuation: Calculates total assets minus liabilities from your balance sheet. Used primarily for liquidation scenarios
• Earnings-based valuation: Values the business based on profit and cash generation history. Requires three years of solid financial records
• Market-based valuation: Multiplies revenue by industry-standard multiples. This is common in sectors with established benchmarks; for example, there is a convention that dry cleaning businesses are valued on annual gross sales, while trust companies are valued on gross fees.

4. Understand tax implications of selling your business

Understanding the tax you'll need to pay is a critical part of selling your business. In the UK, you usually pay Capital Gains Tax on the profit from selling your business.

The tax you pay depends on the sale price, your original investment, and your income tax band. Business Asset Disposal Relief (formerly Entrepreneurs' Relief) may lower your tax bill. Qualifying gains are taxed at 10 percent up to a lifetime limit of £1 million.

Speak to your accountant or tax advisor early. They can help you plan for tax and structure the sale in a tax-efficient way. Keep your financial records organised to make this process easier.

5. Find a buyer

Find buyers by starting with people you know, then look for referrals, and finally use external services.

Internal buyers:

• Family members or employees: Existing relationships and business knowledge
• Suppliers, customers, or competitors: Industry familiarity and strategic fit

Network referrals:

• Professional advisors: Accountants, bankers, and lawyers with entrepreneur networks
• Business consultants: Industry connections and qualified prospects

External buyer services:

• Business brokers: Professional marketing through publications and databases
• Online marketplaces: Wider exposure to unknown buyers

6. Manage the offer

Once you have interested buyers and have shared business details, ask them to submit offers. If you have several buyers, set a clear deadline for offers.

Offers should:

• lay out the price
• identify conditions to be met before closing the deal and set a date for closing
• note any conditions to be met after closing
• specify how and when the money will be paid
• explain any training or support they need from you, and for how long

The offer may also suggest a time frame for due diligence, during which the buyer will run their own checks on the business to make sure they're getting what they expect.

Some buyers may ask you to negotiate only with them for a set period. Others may make their offer depend on the business performing well after the sale. Business brokers can help you decide which offers and conditions to accept.

6. Conduct due diligence

Due diligence is the buyer's comprehensive investigation of your business to verify all claims before finalizing the purchase. This process typically occurs after accepting a conditional offer and covers three key areas:

Legal due diligence

They'll see if there is any pending or ongoing legal action against the business. They'll also check up on things like copyright, trademarks, patents or service agreements.

Financial due diligence

They'll dive into the business books to check that the financial statements are accurate. They may ask for additional reports and forecasts, or run some themselves. They'll also check the business credit rating and possibly the tax history of the business.

Commercial due diligence

Your buyer will also take a wider look at the business and the market it operates in to confirm there's still opportunity for growth. They'll review existing strategies and competitors and the overall business model to ensure the business will remain profitable.

How to speed up due diligence

Due diligence can take time. Speed up the process by providing complete financial records, agreements, and a written business plan. Using accounting software makes it easy to generate reports as needed.

7. Change ownership

Post-sale responsibilities continue after closing. You'll need to complete these essential tasks:

• Tax obligations: File final business tax returns and declare sale proceeds to HMRC
• VAT compliance: Close VAT accounts with HMRC if applicable
• Legal updates: Amend Articles of Organisation to reflect new ownership (limited companies)

Professional support: Work with accountants or brokers to ensure full compliance

Set yourself up for a successful sale

Start preparing to sell your business well before your planned exit. Give yourself plenty of time to organise financial records, secure agreements, document processes, and update your business plan.

Allow plenty of time and break the work into manageable steps. Ask employees and consultants for help. Talk to others who have sold a business for their advice. Preparing well can help you get the best price. Learn more about small business exit strategies.

Ready to organise your financial records? Try Xero accounting software for free to streamline your bookkeeping and help make your business more attractive to buyers.

FAQs on selling a business

Selling your business raises a lot of questions. Here are answers to some of the most common ones.

How much can I sell a small business for?

There's no single formula, but common methods include valuing based on a multiple of your profits, the value of your assets minus liabilities, or what similar businesses have sold for. A professional valuer or broker can give you the most accurate estimate for your specific business.

Do I pay tax if I sell my business?

You usually need to pay Capital Gains Tax on any profit from the sale. The rate depends on your income and the amount of gain. Get professional tax advice early to understand your obligations and possible tax reliefs.

What is the fastest way to sell a business?

Selling to a known party, like an employee or competitor, is often quicker than finding a buyer on the open market. Regardless of the buyer, having all your documentation prepared and your financials in order will speed up the process significantly, especially during due diligence.

When should I start preparing to sell my business?

It's best to start planning one to three years before you intend to sell. This gives you enough time to get your financial records in top shape, secure key contracts, and document your business processes. A longer runway helps you maximise your sale price.

Do I need a business broker to sell my business?

A broker isn't always necessary, especially if you already have a buyer in mind. However, they can be very helpful for valuing your business, marketing it confidentially to a wider network of potential buyers, and managing negotiations. They can often help you achieve a better price and terms.