Preparing your business for a successful exit - Selling a business

Selling a business is one of the most significant decisions an owner will make. It is not just a transaction. It is the culmination of years of effort, investment and commitment. Yet many businesses fall short of expectations not because the business lacks value, but because preparation starts too late.

Taking time to prepare properly can protect value, reduce risk and lead to a smoother, more successful outcome.

Selling a business is a process, not an event

One of the most common misconceptions is that selling a business begins when it is formally put on the market. In reality, the most successful exits are planned well in advance.

Buyers do not just assess what a business has achieved in the past. They focus on how it operates today and how it is likely to perform in the future. Early preparation allows owners to step back and view their business through a buyer’s lens, identifying areas that may raise questions and addressing them early.

Even where a sale is not imminent, planning ahead creates flexibility and choice when opportunities arise.

Realising value. Understanding your options

An exit does not always mean a third-party sale. For many SME owners, there are several ways to realise value, each with different commercial, tax and personal considerations.

Some businesses transition to the next generation, allowing family involvement to continue while potentially benefiting from certain tax efficiencies. Others pursue a management buyout, where an experienced internal team takes ownership. In these scenarios, buyers already understand the business, although deal terms are often more buyer-friendly and the vendor may remain involved in the funding structure.

A third-party sale, whether through an unsolicited approach or a formal sale process, can also be an effective route. A structured and competitive process often helps maximise value by creating tension between buyers.

In some cases, where trading has ceased but assets remain, winding down through a solvent liquidation may be appropriate. From a tax perspective, distributions in a solvent liquidation are treated in a similar way to a sale of shares.

The right option depends on the business, the owner’s objectives and the timing.

Timing. When is the right moment?

There is no perfect or universal time to sell a business.

Some owners plan to become “sale ready”, giving themselves time to prepare the business properly. As a rule of thumb, this can take at least two years. Others may be approached unexpectedly by a competitor, supplier or broker, requiring quicker decision-making.

Being prepared means you are in control, regardless of how or when an opportunity arises.

Is your business ready to be sold?

Buyers look for businesses that can operate successfully beyond their current owner. That means strong systems, clear processes and reliable information.

Key areas typically include:

• Clear and consistent financial reporting

• Sustainable earnings and margins

• Reduced reliance on the owner in day-to-day operations

• Robust governance and internal controls

Sale readiness is not about perfection. It is about clarity, transparency and confidence.

Valuation and what really drives value

While valuation will always consider  earnings, buyers also look closely at what supports those numbers.

Factors that consistently attract interest include recurring revenue streams, consistent performance, contracted customers, particularly annual or multi-year agreements, government or blue-chip clients, and a strong, capable management team.

Understanding these value drivers early allows owners to focus their efforts where it matters most.

Preparing for an exit is about more than maximising a number. It is about protecting what you have built and putting yourself in the strongest possible position to choose the right outcome, at the right time.

The numbers buyers really care about

Financial performance plays a central role in any sale process. However, buyers are rarely interested in headline profit alone. They want to understand the quality and sustainability of earnings.

This includes examining :

·      How revenue is generated and whether its diversified

·      The consistency of margins over time

·      Cash flow generation and working capital requirements

·      The extent of one-off or exceptional items

·      The realism of forecasts and growth assumptions

Buyers are ultimately paying the price for future performance. Clear, well supported financial information gives them confidence and strengthens the seller’s negotiating position.

Common issues that delay or derail sales

Many transactions encounter challenges that could have been addressed earlier with the right preparation. Common issues include incomplete financial information, owner dependency, customer concentration, or historic one off items inflating profits.

These issues do not necessarily prevent a sale. However, if they are discovered late in the process, they can lead to delays, price reductions, or increased scrutiny from buyers. Identifying potential concerns early allows sellers to address them proactively or reflect them appropriately in the transaction structure.

The role of vendor due diligence

Vendor due diligence is a valuable tool for business owners preparing for a sale. It involves reviewing the business from a buyer’s perspective before going to market.

This process helps to:

·      Identify potential risks or issues early

·      Improve the quality and consistency of information presented to buyers

·      Reduce uncertainty during negotiations

·      Support a smoother, more efficient transaction process

By understanding how a buyer may view the business, sellers are better positioned to manage the process and protect value

Getting the right advice early

Selling a business involves more than financial performance alone, Tax, Structure, timing and commercial considerations all play a role in achieving the best outcome. Engaging experienced advisors early in the process helps ensure these elements are considered together. The right advice can help business owners understand their options, plan effectively, and navigate the complexities of a transaction with confidence.

Supporting your next step

At UHY FDW, we work with business owners at critical moments in their journey. Not just when a sale is underway, but well before decisions are made.

Our corporate advisory team supports owners in assessing sale readiness, understanding their options and preparing their business to stand up to buyer scrutiny. We take a joined-up approach, considering financial performance, value drivers, structure, tax and timing together, so nothing is looked at in isolation.

By combining technical expertise with a clear commercial understanding of how buyers think, we help business owners take control of the process, protect value and move forward with confidence.

If you are starting to think about selling your business, or want to understand what being “sale ready” really looks like, our team is here to help.

Speak to our corporate advisory team to discuss how we can support you in preparing for a successful exit.

Get in touch!