Thinking of selling your small business? 5 things to consider

Selling your small business is a significant milestone. Whether you’re planning for retirement, pursuing new ventures, or responding to unexpected circumstances, the process can be complex and overwhelming. To ensure a smooth and profitable transition, there are key considerations every business owner must address.This guide walks you through five essential questions to help you prepare and make informed decisions when selling your business.How Can You Determine the Value of Your Business?One of the first steps in selling a small business is getting an accurate valuation. Without knowing your business’s true worth, you risk underselling or alienating potential buyers. Business valuation involves assessing factors such as:Financial Performance – Analyze your profits, revenue, and retained earnings. Having up-to-date financial statements is essential. Tangible and Intangible Assets – Beyond physical assets like equipment or inventory, consider intellectual property, trademarks, or brand value. Industry Trends – Research comparable businesses in your industry to benchmark your valuation.For example, when Borehamwood-based Lupa Foods was acquired by Geia in January 2025, a comprehensive valuation would have played a critical role in the negotiations. Engaging a professional valuation expert can provide insight into what your business is worth and showcase its potential to buyers.You can find more about business valuation on MERGR’s acquisition insights.What Are the Capital Gains Tax Implications?Selling your business often results in a financial gain, which could be subject to Capital Gains Tax (CGT). Understanding how much tax you’ll owe—and whether you’re eligible for any reliefs—can help you avoid unpleasant surprises and optimise your sale.Key considerations include:Business Assets – CGT applies to gains from selling land, buildings, or company shares. Business Asset Disposal Relief – Formerly known as Entrepreneurs' Relief, this scheme allows eligible business owners to pay a reduced rate of CGT (10%) on taxable gains. More details can be found on [GOV.UK](https://www.gov.uk/). Timing – The timing of the sale can impact your tax bill. Seek advice on structuring the transaction to potentially reduce liabilities.The value of forward planning in this stage cannot be overstated. Consulting a tax advisor skilled in UK regulations will help you evaluate your options for minimising CGT while staying compliant with HMRC requirements.Should You Sell Shares or Assets?One of the most important structural decisions in selling your business is whether to sell its shares or its assets. Each approach comes with unique tax, legal, and financial implications.Share Sale – All company shares are transferred to the buyer, giving them ownership of everything, including assets, liabilities, employees, and contracts. This eliminates future obligations for the seller. Asset Sale – Only specific assets of the business are sold, such as equipment, inventory, or customer lists. The original business entity may remain active, allowing flexibility over which liabilities or assets you retain.For example, during the acquisition of Third Millennium by ASSA ABLOY in January 2025, the choice between an asset and share sale would have been carefully made to benefit both parties. Understanding the differences and working with experienced legal advisors will ensure the structure aligns with your goals.You can find more details on asset and share sales at MERGR.How Do You Prepare for the Hand-Over?A seamless hand-over is critical for ensuring continuity after the sale. Buyers often want reassurance that the business can operate smoothly without them facing constant hurdles post-purchase.Key steps to consider include:Transitioning operational procedures and customer relationships. Ensuring that directors and key personnel remain aligned to support the buyer during the initial months. Providing training or handbooks that detail critical processes.For instance, when the former Virgin Hotel in Glasgow was sold to the Martin Property Group in 2024, a detailed hand-over plan would have been implemented to preserve the service quality that customers expected.Taking the time to prepare clients, employees, and systems for the hand-over sets both you and the buyer up for success.Why Should You Engage Professional Advisors?Selling a business involves various elements, from financial audits and legal compliance to negotiation and tax planning. It’s nearly impossible to tackle everything effectively without expert guidance.Here’s how professional advisors can support you:Accountants – They prepare accurate financial statements, tax returns, and valuations. They also ensure compliance with UK regulations. Legal Advisors – Help with due diligence, draft contracts, and protect shareholder interests. Business Brokers – Offer expertise in marketing your business, sourcing buyers, and managing negotiations.Recognise the value of investing in professional services to reduce risks and maximise the sale outcome. If online accountants, for example, assist with preparing accurate financial data, the result is a foundation of trust that makes your business more appealing to buyers.Are You Prepared to Sell?Selling a small business is not a decision to make lightly. It requires deep reflection, forward planning, and expert execution. By asking the right questions—such as how to value your business or understand tax liabilities—you can position yourself, your business, and its future stakeholders for success.Taking action early puts you ahead of the game. Start by consulting the right professionals, researching market trends, and organising your financial data.Getting started today may lead to a smoother, more profitable exit tomorrow.