Exit
Selling a business is one of the most consequential moments in a founder’s journey. It can mark the start of a new phase – whether that is retirement, reinvention or a continued role alongside new investors. It is also the point at which founders are most exposed to poor advice, weak preparation and ill‑judged timing.
Exit
Selling a business is one of the most consequential moments in a founder’s journey. It can mark the start of a new phase – whether that is retirement, reinvention or a continued role alongside new investors. It is also the point at which founders are most exposed to poor advice, weak preparation and ill‑judged timing.
EXIT
THE BUSINESS
Deciding when, and how, to sell is rarely driven by a single factor. It sits at the intersection of the business’s readiness, market conditions and the founder’s own objectives.
THE BUSINESS
The factors behind a sale
Most exits are shaped by three forces.
The first is the business itself. Founders often consider a sale when they feel they have taken the company as far as they can or when the business needs support, scale or capital that exceeds their appetite to provide it. Establishing the relationship the founder wishes to have with the business after a transaction is a critical starting point. Those seeking a clean break may favour a trade sale or private equity exit, while others may prefer to de‑risk by selling part of their holding while retaining a stake.
The other drivers are buyer appetite and market conditions. Unsolicited approaches or strong valuation activity, particularly in private equity or IPO markets, can prompt owners to consider a sale. While market momentum can be influential, comparing one business to another is rarely reliable. Each company is different, and valuation outcomes are highly specific.
THE BUSINESS
Preparing your business
Financial performance plays a central role in determining both the success of a sale and the value achieved. Buyers and investors are focused on future performance rather than historic results. Demonstrating sustainable growth in revenue and profitability, and clear momentum going forward, is essential.
Alignment between shareholders is also critical. Owners must be clear and unified on objectives and outcomes before entering a process. Misalignment that emerges during a transaction can undermine negotiations and weaken results.
Tax and personal financial planning should begin early. Founders should engage advisers well ahead of a sale to ensure structures are robust and to avoid last‑minute issues. Consideration should also be given to post‑sale income planning as part of the preparation process.
THE BUSINESS
Choosing the best way to sell
The three most common sale routes are trade sales, private equity transactions and IPOs.
- Trade sales involve selling the business to a corporate buyer, typically as a full exit. Buyers are often looking to expand into new markets, acquire technology or strengthen existing capabilities.
- Private equity transactions have become more varied and flexible. While once associated with full exits, they now include minority investments, majority sales and other structures that can allow founders to retain equity, remain involved or partially realise value.
- IPOs typically involve a partial sale and provide opportunities for further liquidity over time. They are often used for succession planning or to professionalise a business ahead of its next stage of development, rather than as a complete exit.
The right route depends on the founder’s objectives, appetite for control and desired future involvement, not solely on valuation.
THE BUSINESS
Timeline of a sale
The timeline for a sale depends on both the owner’s objectives and the transaction type. Once advisers are appointed, preparation usually takes six to nine months, although selecting the right advisers can take additional time.
In general, if a business is expected to perform strongly over the next six to eighteen months, this can be an appropriate window to begin planning a sale. IPOs typically require longer preparation, often twelve to eighteen months, before a company is ready to list.
THE BUSINESS
Avoiding common mistakes
The most common reason sales fail is underperformance during the process. Over‑optimistic forecasts can lead to pricing challenges during negotiations and damage trust with buyers.
Founders should be ambitious but realistic when setting expectations for future performance. Momentum must be maintained throughout due diligence, as any decline in performance can cause buyers to reassess terms or withdraw entirely.
THE BUSINESS
What you need to know
Choosing the right time to sell is driven as much by preparation and discipline as by opportunity. Careful alignment of business readiness, market conditions and personal objectives is central to achieving a successful outcome.
01
Begin planning a sale well in advance, ideally up to eighteen months before a transaction.
02
Assess sale options in light of whether you want to remain invested or involved.
03
Ensure forecasts are realistic and defensible.
04
Engage tax and wealth advisers early to plan post‑sale income and structure.
THE BUSINESS
The Journey to sale
with Tim Phillips
The events of the past 18 months have prompted many entrepreneurs and business owners to reassess their objectives for both the business and themselves, in some cases resulting in a new, or revived, interest in a business sale.
A successful business sale is a time for celebration, but don’t pop the champagne corks too early. There are many important decisions to make before – and after – a deal is done. Taking the right steps now is essential to achieving the future you want for yourself, your family and the company.”
— Jake van Beever
Client Adviser
A successful business sale is a time for celebration, but don’t pop the champagne corks too early. There are many important decisions to make before – and after – a deal is done. Taking the right steps now is essential to achieving the future you want for yourself, your family and the company.”
— Jake van Beever
Client Adviser
EXIT
THE FINANCES
Once the decision to sell has been made and the timing is right, focus shifts to two connected priorities. First, securing the strongest outcome from the transaction itself. Second, ensuring the wealth created is protected, structured and sustainable long after completion. A successful exit is defined not only by price, but by what founders retain, how risk is shared and how life works afterwards.
THE FINANCES
Securing value in the transaction
Maximising value begins well before a business is formally taken to market, but at this stage the emphasis is on quality, credibility and alignment, rather than timing.
Key areas that materially influence outcomes include:
Earnings quality and financial clarity
- Buyers place a premium on recurring, contracted revenues
- Predictability and visibility of earnings often matter as much as growth
- Robust, well‑presented financial data underpins both valuation and trust
Credible forecasting
- Ambitious but realistic projections strengthen negotiating position
- Forecasts must be clearly supported by underlying data
- Weak or inconsistent numbers are among the fastest ways to lose value during a process
Stakeholder alignment
- Disagreement between founders, family members or shareholders often emerges under pressure
- Unresolved issues can delay negotiations, weaken leverage or derail transactions entirely
THE FINANCES
Deal structure matters as much as price
Headline valuation rarely tells the full story.
Founders should assess offers in the round, including:
- Earn‑outs and performance conditions
- Ongoing involvement requirements
- Risk allocation between buyer and seller
- Certainty of proceeds versus deferred consideration
Buyers frequently want founders to remain involved post‑sale, particularly during an earn‑out period. Where founders are seeking a clean break, the presence of a strong, credible management team becomes central to preserving value.
Competitive tension between buyers can support better outcomes, but structure and terms often determine what founders ultimately keep.
David Kilshaw
Head of Private Client Wealth Solutions
THE FINANCES
Tax outcomes can materially alter the net proceeds of a sale, and some of the most valuable reliefs depend on decisions made years before completion.
David Kilshaw, Head of Private Client Wealth Solutions, helps founders explore the structural and tax planning opportunities available to them and their families. His guidance typically addresses issues such as succession planning, the tax implications of a business sale, the use of tax efficient vehicles (like trusts and family investment companies) and questions such as ‘when should I pass wealth to my children and how can I best do it?’.
David Kilshaw
Head of Private Client Wealth Solutions
THE FINANCES
Headline valuation is not the same as what a founder ultimately keeps. Tax outcomes can materially alter the net proceeds of a sale, and some of the most valuable reliefs depend on decisions made years before completion.
One of the most significant is Business Asset Disposal Relief (BADR), a capital gains tax relief available to qualifying founders selling shares in privately owned trading companies.
At its maximum, BADR can reduce capital gains tax on up to £1 million of gains to 18 percent, representing a potential tax saving of up to £180,000 per individual. The relief is subject to a lifetime allowance and is not automatic. It must be claimed and eligibility must be met in advance.
━ Who may qualify
In broad terms, BADR may be available where a founder:
- Owns at least 5 percent of the company’s ordinary share capital and voting rights
- Is an employee or director, including part‑time roles
- Has met these conditions for at least two years prior to sale
- Holds shares in an unquoted trading company, including certain AIM‑listed businesses
While the thresholds appear straightforward, the definitions used by HMRC are specific and not always intuitive.
━ Where founders fall short
Founders commonly lose access to BADR because:
- Shareholdings fall below the 5 percent threshold, sometimes unintentionally during fundraising
- Shares do not qualify as “ordinary shares” with rights to proceeds
- The founder steps back from an employment or director role too early
- The business fails to meet the definition of a trading company, often due to excess cash or non‑trading activity
Once a sale process is underway, it is often too late to address these issues.
━ Planning ahead
BADR is not universally applicable, but where it does apply it can materially change outcomes. In some cases, family members or spouses holding qualifying stakes may also benefit, subject to the same ownership and timing rules.
For this reason, founders should treat tax planning as an integral part of exit value, not a post‑deal exercise. A tax health check well in advance of a transaction can identify risks, confirm eligibility and prevent avoidable loss of relief.
Tax is rarely the most visible part of an exit, but it is often where value is quietly won or lost.
━ Capital gains tax (CGT): the other decisions that shape what you keep
Even where founders qualify for specific reliefs, capital gains tax still plays a significant role in determining net proceeds from a sale. CGT is charged on the gain realised when an asset is disposed of, not on the headline sale price, and can materially change the profile of an exit outcome.
While CGT is often considered late in a sale process, the timing of a disposal and the use of available allowances can affect both the eventual tax payable and the cashflow available immediately after completion.
━ Timing and cashflow considerations
CGT is generally calculated by reference to the date an asset is disposed of, such as when a contract is signed. In many cases, however, the tax itself is not payable until the January following the end of the tax year in which the disposal occurs.
This can create significant differences in cashflow depending on when a transaction completes. For founders, the timing of a sale can therefore influence not only tax outcomes, but also how long proceeds can be held or invested before liabilities fall due.
It is important to note that different rules apply to different asset types, and not all disposals benefit from deferred payment timelines.
━ Allowances and ownership structure
Each individual has an annual capital gains exemption, meaning gains below this threshold are not taxed. The allowance has reduced in recent years and cannot be carried forward, so unused allowances are lost if not used in the relevant tax year.
In some circumstances, ownership structure can influence how allowances and exemptions apply. For example:
- Transfers between spouses do not generally trigger CGT at the time of transfer
- Each individual has their own annual exemption
- Certain assets or investment types may be treated differently for CGT purposes
These considerations highlight why ownership and structure matter well before a sale is completed.
━ How this fits with business sales
For company owners, CGT operates alongside other potential reliefs and exemptions. While specific reliefs can significantly reduce tax on part of a gain, CGT still applies to remaining proceeds and can affect overall outcomes.
Founders often focus on valuation and deal terms while underestimating how much timing, structure and allowances influence what is ultimately retained.
CGT is not simply a technical detail. It shapes:
- Net proceeds
- Post‑sale liquidity
- The flexibility founders have immediately after an exit
━ Treated early, not late
Once a transaction is agreed or completed, options narrow considerably. Decisions that affect CGT outcomes are often linked to timing, ownership and structure, rather than actions taken after a sale.
For this reason, capital gains considerations are best understood as part of exit planning, not as a post‑completion exercise.
The information above is not intended and should not be construed as tax advice. Each investor should seek their own independent tax advice.
THE FINANCES
From business income to personal wealth
The financial shift following a sale is structural, not incremental.
Where founders were previously supported by regular income from the business, post‑sale wealth is typically held as a pool of capital. One client described this change as moving from a “river” of income to a “lake” of wealth.
Preserving that lake requires an intentional, long‑term plan.
Before completion
- Pre‑sale tax planning is critical, as options narrow significantly after a transaction
- Share transfers or employee share schemes may be used to improve net outcomes
After completion
- Creating sustainable cash flow from invested assets
- Managing investment risk and liquidity
- Estate and inheritance planning
- Aligning wealth with the founder’s next stage of life
Without a clear framework, newly liquid wealth can quickly lose structure and purpose. A successful sale is measured not only on completion day, but by how well it supports the years that follow.
A successful exit isn’t just about the business – it's about you. Too often, we see deals stall or lose momentum when personal wealth and readiness aren’t part of the planning. Aligning your personal wealth strategy with your business plan can help ensure a smooth, successful transition.”
— Lucy Deakin
Client Adviser
EXIT
THE FOUNDER
For many founders, the decision to sell a business begins with a personal inflection point rather than a commercial trigger. It is often prompted by a change in priorities, a desire for new challenges, or reflection on what life beyond full ownership might look like
THE FOUNDER
Thinking about what comes next
Founders typically start by asking themselves a small number of fundamental questions:
What do I want my future involvement with the business to be?
Am I looking for a clean transition or a more gradual step back?
How do my personal ambitions align with the next phase of the business?
There is no single right answer. What matters is having clarity on your own objectives before external conversations begin.
Creating time to plan deliberately
Many founders receive unexpected approaches, which can bring urgency before there has been time to step back and reflect. Decisions tend to be more balanced when they are made with foresight rather than under pressure.
Planning ahead allows space to:
- Reflect on personal readiness for change
- Align expectations with co‑owners or family members
- Consider how a future transition supports long‑term independence and lifestyle goals
This period of reflection can be just as important as any formal preparation.
Navigating pivotal moments with confidence
Comparison with peers or highly visible exits can create noise at moments that require calm judgement. Every founder journey is different, and outcomes are strongest when decisions are anchored in individual circumstances rather than external benchmarks.
Being honest about emotional readiness as well as practical considerations can help avoid rushed choices and support a transition that feels right on a personal level.
A milestone beyond the transaction
Selling a business is not only a professional milestone. For many founders, it represents the closing of one chapter and the beginning of another.
With thoughtful preparation and the right professional support, founders can approach this moment with confidence, ensuring decisions are made on their own terms and aligned with what comes next.
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