The journey from ownership to exit

You want to exit your business and attract several interested buyers. You want multiple strong, competing offers. You want the due diligence to reinforce how well run and profitable the company is. The sale goes through without hold ups or renegotiations, within just a few months, in the most tax efficient way. Six months after listing the business, you’re relaxing somewhere sunny with a very healthy bank balance and an eye on your next adventure. 

That’s what we want the process to look like for you. Unfortunately, that’s often not how it goes. Instead, we see businesses for sale that struggle to secure a buyer, and where prospective buyers get cold feet during the due diligence processes. A surprising number of sales fall over. 

There has been so much uncertainty over the past three years, causing acquirers to be extremely cautious. Just like house buyers, they want something they can walk into without having to address a lot of risk and potentially expensive problems. Instead, buyers are looking closely, spotting potentially risky tax positions, key personnel risk, insufficient holiday pay accruals, or even just poorly kept financial records. In the current climate, buyers lose faith quickly and they’re easily spooked; they simply walk away and hold out for another business to buy. 

Alternatively, a buyer may be willing to proceed with a business purchase after extensive due diligence, for a materially lower price and allocating as much risk as possible to the seller through hefty warranties, indemnities and allocating a large proportion of the price to an earn out. All this can make the sale process stressful and drawn out, leaving the owner with a disappointing final amount of cash in hand on the occasions where deals do make it across the line. 

Increase your chances of achieving a successful sale  

The stage of a business sale process that sets you up for success the most is the first one: preparation. It typically takes between 18 months and two years to fully prepare for a sale, because you need to address both the financial and non-financial drivers of value and deal appeal, some of which include:

• Stable revenue with consistent cashflows: Buyers don’t want to make regular cash injections, so having revenues from recurring sources like service and maintenance contracts or strong brand loyalty will make a business very attractive. 
• Controlled costs and minimal working capital requirements: These signal good financial control, disciplined management and will directly impact the cash you receive. 
• Meticulous record-keeping and transparent financial reporting: This indicates professionalism and discipline, reassures buyers about the health of the business and will make the due diligence phase significantly smoother for the seller 
• A business that can run without you: Are you able to take time away from the business while it keeps operating smoothly? Buyers don’t want a business that will struggle after a change in ownership. 
• A clear growth plan: Ideally one against which the business has already made tangible, but not necessarily material, progress. 
• Effective risk management: Identify, manage and mitigate key risks like customer concentration, supplier dependency, regulatory exposure, key personnel risk and IT risks.
• A diverse customer base: The ability to demonstrate revenue generation isn’t reliant on a few key clients increases a buyer’s confidence in future cashflows.
• Optimised tax planning: This ensures the sale is structured to minimise tax liabilities and maximise your post-sale tax proceeds.

It is also possible to get peace of mind before starting the sale process. Undertaking vendor due diligence will help you to uncover potential red flags, give you the opportunity to fix issues early or, if that isn’t possible, prepare clear explanations and supporting evidence, ready for the buyer’s enquiries. And while a buyer will still want to undertake their own due diligence, it’s often less intensive when vendor due diligence has been carried out.

Tax: Not a last-minute consideration

All too often, tax gets treated as something to tidy up once a buyer is found. But it needs to be considered throughout the entire sale process because it can materially change what actually ends up in your pocket. A headline sale price can look attractive, but the after-tax cash proceeds, and the timing of when you receive them, can vary significantly depending on how the deal is structured and what sits behind the numbers. Bringing tax into the conversation early helps avoid value leakage, reduces surprises late in the process, and gives you more control over the outcome.
 
One of the most mission-critical tax questions is whether the transaction is structured as a share sale or an asset sale. That single decision can dictate the tax profile for both parties and, as a result, the commercial terms. Buyers may prefer asset purchases to step up the cost base of assets and manage historic risk. Sellers may prefer share sales to simplify the exit and potentially improve after tax proceeds. When these preferences diverge, tax becomes a key negotiating lever. It can influence the price, the allocation of value across assets, the use of earn outs or deferred consideration, and the scope of indemnities and warranties. In other words, tax does not just follow the deal – it can shape it. 
 
Tax can also restrict the ability to get cash out of the business before and after completion. Historical distribution settings, imputation credit balances, debt levels, shareholder current accounts, and group structures can all affect whether value is trapped or can be extracted efficiently. Poor planning can leave sellers with proceeds sitting in the wrong entity, unexpected tax costs on extraction, or a sub optimal split between pre completion and completion cash. Thinking through tax and cash extraction early allows you to align the sale mechanics with what you actually want, which is clear, bankable, after-tax cash.
 
A smoother sale process is usually the result of several things coming together, and good tax health, hygiene, and governance is an important part of that. It means ensuring filings are up to date, positions are supportable, and documentation is consistent, especially around related party arrangements. It also means having clear ownership of tax matters, a good audit trail for key decisions, and issues identified, quantified, and managed early before they become buyer leverage. Just as importantly, it involves sanity checking your structure well ahead of going to market, not only for tax efficiency but also to keep the story simple for a buyer and to avoid last minute restructuring that can trigger tax costs, delay the transaction, or raise red flags.
 
Finally, sellers increasingly benefit from considering vendor tax due diligence as part of readiness. A targeted presale review can identify exposures, confirm how key tax positions are likely to be viewed by a buyer, and help you prepare clear explanations and evidence. Done well, it reduces the risk of price chips, limits indemnity creep, speeds up buyer diligence, and helps you negotiate from a position of strength. Put simply, if you treat tax as a continuous workstream from planning, through marketing, due diligence and negotiation, to completion, you materially improve both deal certainty and the after-tax result.

Buyers are proceeding with considerable caution 

The economy has been challenging for the past three years and now due to global conflicts, shows no sign of any dramatic improvement. In this environment, buyer due diligence has become deeper, broader and far more forensic than many sellers expect. They are scrutinising financial performance, tax positions, compliance, contracts, systems, forecast assumptions and key people risks in detail.

With proper preparation and the right groundwork in place, a sale becomes less about defence and more about choice. A well-prepared business doesn’t just sell more easily. It sells on better terms, with greater certainty, and with more cash for the vendors at the end of the journey,

As an owner, save yourself the stress of a collapsed sale or a disappointing financial result by mitigating the risks before you put your company on the market. You’ve worked hard to build a successful enterprise, so don’t fall at the final hurdle.