Exiting your business is one of the biggest financial and personal milestones you’ll ever face. Whether you’re selling, passing it to family, or preparing for retirement, a business exit isn’t just about money — it’s about your future lifestyle, your family, and the legacy of what you’ve built.
However, with careful planning, you can structure the deal in a way that protects your wealth, maximises tax reliefs, and sets you up for life after work. Here’s what every UK business owner should know before starting the journey.
Why Plan Your Business Exit Early?
Many owners wait until a buyer shows interest before thinking seriously about their exit. That’s a mistake. Preparing two to three years in advance allows you to:
- Fix compliance and paperwork issues that could delay a sale.
- Strengthen your accounts and show consistent growth.
- Use valuable tax reliefs before rules change in future Budgets.
- Give your family time to prepare — updating wills, trusts, or insurance.
Think of early planning as adding value. Buyers pay more for businesses with strong systems, clean records, and a clear growth story.
Step 1: Set Your Goals
The first step in planning a business exit is to decide what matters most to you.
Yes, the headline price is important — but so are:
- Deal structure – Do you want all cash upfront, or would you accept staged payments or an “earn-out” tied to future performance? (Over 60% of SME deals in 2024 included earn-outs.)
- Post-sale income – What will your lifestyle cost? It’s a good idea to map out a 20-year cashflow, including inflation, pensions, and investments.
- Legacy – Do you want your business to stay independent, merge with a bigger group, or even become employee-owned? (This route is increasingly popular, with more than 2,000 UK businesses now employee-owned.)
By writing these goals down, you’ll have a clear brief for advisers and avoid shareholder disagreements later.
Step 2: Understand How Buyers Value Your Business
Most buyers value companies using an earnings multiple (often applied to EBITDA). In 2024, the median multiple for UK SMEs was 5.4× EBITDA — slightly higher than the year before.
To make sure you get the best valuation:
- Remove unusual or one-off costs from your accounts.
- Highlight recurring revenue, intellectual property, or loyal customer contracts.
- Benchmark your business against others in your sector.
The more transparent and professional your records, the stronger your negotiating position.
Step 3: Get Your House in Order
Buyers usually ask for at least five years of records. Common red flags include missing contracts, unresolved VAT or PAYE issues, and messy R&D claims.
Practical steps to take now include:
- Making sure all HMRC returns are filed and paid.
- Checking that employee share schemes (like EMI options) are properly documented.
- Creating a digital “data room” where all key contracts, property documents, and policies are stored.
The cleaner your records, the smoother and faster the sale.
Step 4: Plan for Tax Efficiently
A business exit can trigger significant tax liabilities, so planning here is essential.
For 2025/26:
- Capital Gains Tax (CGT): 18% (basic rate) and 24% (higher rate).
- Business Asset Disposal Relief (BADR): 14% on the first £1m of lifetime gains (rising to 18% after April 2026).
- Income Tax Bands: Frozen until 2026, which means more people are being dragged into higher rates.
If you expect to sell across two tax years, you may be able to use two sets of allowances. And if your sale could exceed £1m, accelerating completion before April 2026 might save you thousands.
Step 5: Think Beyond the Sale
Selling your business isn’t just about the transaction — it’s about what comes next.
After completion, you’ll need to:
- Keep large proceeds safe (split across banks and consider NS&I for protection).
- Diversify investments, perhaps using pensions, ISAs, or family investment companies.
- Review your will, inheritance tax position, and how wealth will pass to the next generation.
The Autumn Budget confirmed that inheritance tax reliefs will tighten from 2026, so early planning could save your family a big future tax bill.
A Suggested Timeline
To give yourself the best chance of a smooth, profitable exit, aim to:
- 36 months before – Set your goals and review valuation.
- 24 months before – Launch a tax health check and meet relief timelines.
- 12 months before – Create a digital data room and prepare forecasts.
- 6 months before – Negotiate heads of terms and seek HMRC clearance if needed.
A business exit isn’t just a financial transaction. It’s the moment when years of hard work turn into capital that must support your next chapter. By starting early, cleaning up records, and planning your tax position, you can maximise the value you take home — and secure the future you want for yourself and your family.
If you’re even thinking about an exit in the next three years, now is the time to start preparing. Contact us for an exit-readiness review and we’ll help you plan every step, so you get the smoothest deal and the strongest possible financial outcome.
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