Get your business ready to sell, and sell it for more
Buyers pay a multiple of profit. The multiple rises as risk falls. This guide shows what buyers check, what cuts your price, and what to fix first. Start 12 to 36 months before you want to sell.
The simple maths of value
You can raise the price in two ways: grow the profit a buyer believes will continue, or lower the risk so they pay a higher multiple. Lowering risk is often faster and cheaper. A business making £300k profit at 3x is worth £900k. The same business at 4.5x is worth £1.35m.
What buyers check, in order of impact
It runs without you
The biggest single discount is owner dependency. If customers, suppliers and staff all rely on you, a buyer is buying a job, not a business. Fix: build a second tier of managers, hand over key relationships, and take a 2 to 4 week holiday as a test.
Accounts a buyer can trust
Filed accounts on time, monthly management accounts within 15 days of month end, and a clear bridge between the two. Separate personal costs from business costs. Messy books lead to lower offers and longer due diligence.
Recurring, contracted revenue
Contracts, retainers, subscriptions and framework agreements are worth far more than one-off sales. Move customers onto annual or rolling terms with notice periods.
No customer over 15%
If one customer is more than 15 to 20% of sales, expect a lower price, a deferred payment, or an earn-out. Grow other accounts and get the big one under contract.
KPIs tracked every month
5 to 10 numbers that prove the business is healthy: sales pipeline, gross margin, customer churn, average order value, cash conversion, staff turnover. Show 24 months of history if you can.
Written processes
Operations manuals, checklists and training guides for sales, delivery, finance and hiring. This proves the business can be run by someone else.
Steady growth
Three years of rising sales and profit. A credible forecast for the next one to three years, with the pipeline to back it up.
A strong team that stays
Employment contracts, up-to-date HR records, fair pay and a reason for key people to stay after the sale, such as a retention bonus or equity.
A clean legal house
Signed customer and supplier contracts, leases with time left, trade marks and domains in the company's name, data protection in order, no open disputes.
Healthy working capital
Debtors paid on time, sensible stock levels and no surprise liabilities. Buyers expect a normal level of working capital left in the business at completion.
Add-backs: show your true profit
Buyers value the profit the business will make for them. Some of your costs will stop when you leave. These are "add-backs" and they increase your adjusted EBITDA. Keep evidence for each one.
| Usually accepted | Usually challenged |
|---|---|
| Owner pay above a market salary for the role | "We will cut that cost" with no plan behind it |
| Personal costs paid by the business (car, phone, family on payroll who do not work there) | Ongoing repairs called one-off every year |
| Genuine one-offs: a legal case, a rebrand, a relocation | Marketing you stopped to boost profit this year |
| Rent above market if you own the building and will charge market rent | Staff you have not replaced but will need to |
Price is not the whole story
Two offers with the same headline price can be worth very different amounts to you. Understand these before you negotiate.
- Cash at completion: the amount you receive on the day.
- Deferred consideration: fixed payments later. Ask how they are secured.
- Earn-out: payments that depend on future results. Agree clear targets and who controls the business.
- Vendor loan: you lend part of the price to the buyer. Higher price, more risk.
- Cash-free, debt-free: most UK deals. You keep surplus cash and pay off debt, with a normal working capital level left behind.
- Warranties and indemnities: promises you make about the business. Disclose everything up front to limit claims later.
Tax on a sale can change your net proceeds a lot. Speak to a qualified tax adviser early.
A practical exit plan
24-36 months out
- Get a valuation and readiness score
- Start monthly management accounts and KPIs
- Hire or promote a second-tier manager
- Move customers onto contracts
- Tidy the company structure and shareholdings
6-24 months out
- Step back from daily work
- Write down your key processes
- Reduce reliance on your biggest customer
- Fix legal gaps: contracts, leases, IP, HR
- Build a data room of key documents
0-6 months out
- Update the valuation with fresh numbers
- Prepare an information pack
- Approach buyers in confidence
- Compare offers on terms, not just price
- Due diligence, legal agreements, completion
Your data room checklist
Buyers will ask for these. Gather them now and upload them to your free private portal when you are ready.
- Filed accounts, last 3 years
- Management accounts, year to date
- Corporation tax and VAT returns
- Aged debtors and creditors
- Revenue by customer (names can be hidden)
- Budget or forecast
- Organisation chart and staff list
- Key customer and supplier contracts
- Leases and property documents
- KPI reports
- Company structure and shareholdings
- Insurance, licences and accreditations
See where you stand today
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Start my free valuationThis guide is general information, not financial, legal or tax advice.