Selling your business is likely to be the largest single financial transaction of your life, and it is a process rather than an event. The owner who treats it as a journey, deciding they are ready, understanding what the company is worth, choosing the right route, and preparing properly, consistently walks away with more than the owner who reacts to an unsolicited approach and improvises. This guide is the map. It takes you from the decision to sell through to completion, and it compares the three main routes out of a UK business (a trade sale, an Employee Ownership Trust, and a management buyout), each with its own trade-off between cash, control, speed and tax.
The tax picture matters more in 2026/27 than it has for years, because two things have moved. Business Asset Disposal Relief now charges 18% on qualifying gains, up from 14% in 2025/26 and 10% before that. And on 26 November 2025 the Employee Ownership Trust relief that used to make an EOT sale completely tax-free was cut in half. Get the route and the timing right and the difference runs into hundreds of thousands of pounds. This is a general guide, not personal advice, so treat the numbers as illustrations and have your own position modelled before you sign anything.
Deciding whether you are ready to sell
Before you value anything or speak to a buyer, be honest about why you are selling and whether the business is ready. Buyers pay the most for companies that will keep performing without the current owner, so the first question is uncomfortable: how dependent is this business on you? If the answer is "completely", you have work to do before you list, because a business that cannot run without its owner is a job, not an asset, and buyers price it accordingly.
Readiness has three dimensions. Personal readiness is whether you actually want to let go, and what you will do afterward, because sellers who are not emotionally ready tend to sabotage their own deals in the final stretch. Financial readiness is whether the sale proceeds, after tax, deliver what you need for the next phase of life. Business readiness is whether the company can be handed over cleanly: documented systems, a management team that is not just you, clean recurring revenue, signed contracts, and no skeletons that diligence will drag out. The gap between where you are and where a buyer wants you to be is exactly the work of exit planning, which ideally starts two to three years out. Our guide to business exit planning sets out that longer runway in detail.
What is your business worth?
You cannot run a sensible process without a realistic view of value, and value is a range, not a single number. Most owner-managed UK businesses are valued on a multiple of adjusted profit. For trading companies that usually means a multiple of EBITDA (earnings before interest, tax, depreciation and amortisation), typically somewhere between three and eight times depending on sector, size, growth and how transferable the earnings are. Smaller owner-operated businesses are often valued on SDE (seller's discretionary earnings), and asset-heavy or property-backed businesses may be valued partly on their net assets instead.
The multiple is where sector matters. A recurring-revenue software or services business with sticky contracts commands a higher multiple than a project-based business whose income resets to zero every year. A business overly reliant on one customer, or on the owner personally, is discounted. Before you go to market it is worth normalising your accounts, adding back genuine owner discretionary costs, and applying a defensible multiple so you enter negotiations anchored on evidence rather than hope. Our business valuation guide walks through every method and the sector multiple table, and you can get an indicative figure from the business valuation calculator embedded there. Remember that valuation is not price: the price is whatever a real buyer will actually pay, which is why running a competitive process matters.
The three exit routes: trade sale vs EOT vs MBO
There are three main ways to sell a going concern, and choosing between them is the single most important decision in your exit. Each answers the question "who ends up owning this?" differently, and each has a distinct control and tax profile.
A trade sale means selling to another company or an investor: a competitor, a larger group buying into your market, or a private equity house. It typically delivers the most cash at completion and the cleanest break, but you hand the business, its name, its staff and its culture to a new owner who may run it very differently. On a share sale you can normally claim Business Asset Disposal Relief on qualifying gains.
An Employee Ownership Trust (EOT) sells a controlling interest to a trust that holds the company on behalf of all its employees. It keeps the business independent, rewards the people who built it, and lets you exit gradually. The consideration is usually paid out of the company's future profits over several years rather than in one lump at completion, so it is slower to get your cash. Crucially, the tax relief on an EOT sale was cut from 100% to 50% on 26 November 2025, which we cover in full below and in our Employee Ownership Trust guide.
A management buyout (MBO) sells the business to the people who already run it. It rewards loyalty, keeps continuity, and can be discreet, but the management team usually has to raise funding to pay you, which is where the deal gets complex and can slow down. From your side as seller, an MBO share sale is taxed much like a trade sale with BADR available. Our management buyout guide explains the structure in full. One important boundary: this firm advises on the exit and its structure, but we do not arrange, source or introduce the finance that funds a buyout, which is a regulated activity handled by an authorised commercial finance broker.
Comparing the three routes on the same business
The table below compares the routes for a hypothetical trading company sold at a £4,000,000 valuation with a £200,000 base cost, giving a £3,800,000 gain. The tax figures use 2026/27 rates and, for the EOT column, the post-26-November-2025 rules.
| Factor | Trade sale | Employee Ownership Trust | Management buyout |
|---|---|---|---|
| Who ends up owning it | A competitor or investor | A trust, for all employees | Your existing managers |
| Cash at completion | Usually highest, often most upfront | Lower upfront; paid from future profits | Part upfront, often deferred or vendor loan |
| Control and legacy | You lose control; culture may change | Independence and culture preserved | Continuity, run by known people |
| Seller's CGT on £3.8m gain | ~£851,000 (BADR 18% on £1m, 24% on rest) | ~£455,000 now, plus £1.9m latent in trust | ~£851,000 (as trade sale, BADR available) |
| Typical speed | 6 to 12 months | Buyer exists; funding/structuring takes time | Buyer exists; funding can slow it |
| Best when you want | Maximum cash, clean break | Legacy, independence, reward staff | Continuity, reward the team |
The headline takeaway is that no route is universally best. A trade sale maximises cash, an EOT protects legacy and staff, and an MBO keeps the business in familiar hands. The tax gap between them narrowed sharply in November 2025, which is why the EOT is no longer the automatic tax winner it was for the previous decade.
Two further routes sit alongside the main three. If there is no buyer and the value is really the cash and assets on the balance sheet, an owner can extract the reserves and wind the company up through a Members' Voluntary Liquidation, taking the distribution as a capital gain rather than a dividend. And where the goal is succession rather than a sale, gifting or transferring shares to family (often using holdover relief) passes the business down without a market sale at all. Both change the tax picture materially, and both are compared against a trade sale and an EOT on the same figures in our selling a business tax comparison. For most owners with a genuine third-party buyer, though, the choice comes down to the three routes in the table above.
Share sale versus asset sale
Once you have a route, the deal is structured one of two ways, and the choice has real tax consequences. In a share sale you sell the shares in your company. The buyer takes the whole entity, assets, contracts, staff and history, and you receive the proceeds personally as a capital gain. This is almost always what a seller of an incorporated business wants, because the gain qualifies for Business Asset Disposal Relief on the first £1 million and the money is in your hands directly.
In an asset sale, the company sells its trade and assets and keeps the shell. The proceeds land inside the company, not in your pocket, so you then face a second tax charge to extract the cash, whether as dividends, salary or by winding the company up through a Members' Voluntary Liquidation. Buyers frequently prefer asset deals because they can cherry-pick what they want and leave historic liabilities behind. The structure is therefore a negotiation, and the price should reflect who bears the extra tax. For most owners, holding out for a share sale, or being paid enough to compensate for an asset deal, is the right instinct.
The tax on exit: CGT, BADR at 18% and the EOT 50% change
Tax is where the largest sums are won or lost, and 2026/27 is a year of change. On a share sale your chargeable gain is the sale proceeds less your original base cost, less the £3,000 annual exempt amount. Business Asset Disposal Relief then taxes the first £1,000,000 of qualifying lifetime gains at 18% (up from 14% in 2025/26), with the balance taxed at the standard 24% for higher and additional rate taxpayers, or 18% to the extent it falls within any unused basic rate band. To qualify for BADR you generally need to have held at least 5% of the shares and voting rights and been an officer or employee for at least 24 months before the sale.
On our £3,800,000 gain, that is £1,000,000 taxed at 18% (£180,000) plus £2,797,000 taxed at 24% (about £671,000), a total of roughly £851,000 of CGT and around £3.15 million net. We deliberately do not re-explain every BADR condition here, because our selling your business CGT and BADR guide and our Business Asset Disposal Relief explained page already cover the mechanics in depth. The rate change itself is covered in our note on the 2026 BADR rate change.
The Employee Ownership Trust change every owner must know
For a decade, a sale of a controlling interest to an Employee Ownership Trust attracted 100% Capital Gains Tax relief, so a qualifying seller paid no CGT at all. That is no longer true. At the Autumn Budget on 26 November 2025, the relief was cut from 100% to 50%, with immediate effect for disposals on or after that date. Under the new rule, 50% of the gain on the sale to the trustees is the seller's chargeable gain at the time of sale, and the other 50% is held over and bites on any future disposal of the shares by the trustees. Business Asset Disposal Relief and Investors' Relief cannot be claimed on the taxable 50%, so it is taxed at the ordinary CGT rate for shares (24% for higher and additional rate sellers, 18% within any unused basic rate band), after the £3,000 annual exempt amount.
Put concretely, on our £4,000,000 sale with a £3,800,000 gain: half the gain, £1,900,000, is chargeable now. Less the £3,000 annual exempt amount, that leaves £1,897,000 taxed at 24%, giving £455,280 of CGT payable at sale. The remaining £1,900,000 is not taxed at sale but sits as a latent gain that will bite the trustees on a future disposal. Before 26 November 2025 this exact exit was completely tax-free. The same sale today triggers roughly £455,000 of CGT and leaves a further £1.9 million of latent gain inside the trust. Guides that still describe a sale to an EOT as entirely CGT-free were written before the change and are now wrong, so treat any "0% CGT" EOT pitch as out of date.
Which route is most tax-efficient is a genuine decision, not a foregone conclusion, and it depends on your gain, your remaining BADR allowance and how quickly you need the cash. Our dedicated selling a business tax comparison puts trade sale, EOT, liquidation and family gift side by side on the same figures, and is the page to read when you are weighing the routes purely on tax.
Preparing the business for sale and due diligence
A buyer will investigate your business in forensic detail before they commit, and the quality of your preparation directly affects both the price and whether the deal completes at all. Due diligence covers financial, legal, tax, commercial and employment matters. The buyer's advisers will pick apart your accounts, verify your tax compliance, read every material contract, test your customer concentration and check that your statutory records are in order.
You reduce risk and protect price by getting ahead of this. Build a data room (a secure, organised set of the documents a buyer will ask for) covering three years of accounts, tax returns, key contracts, employment records, leases, intellectual property and any litigation. Normalise your financials so the underlying profitability is clear. Resolve disputes, tidy up related-party arrangements, and fix the obvious value-killers before you list rather than under negotiation pressure. Problems surfaced during diligence are the most common cause of price chips and collapsed deals, so front-loading the work almost always pays for itself. Our guide to preparing a business for sale gives the full readiness and data-room checklist.
Finding a buyer and whether you need a broker
How you find a buyer depends on your route. For a trade sale you either already know the likely acquirers in your market or you run a process to find them. Many owners use a business broker or corporate finance adviser to do this: they value the business, prepare an information memorandum, approach a curated list of buyers confidentially, qualify who is serious, and create competitive tension so more than one party is bidding. That competition is often worth more than the fee, because a single unsolicited buyer has every incentive to low-ball you.
Brokers typically charge a retainer plus a success fee, commonly in the 3% to 10% range and weighted toward completion, with larger deals attracting lower percentages. You do not always need one. If your buyer already exists, a competitor who has approached you, your own management team, or an Employee Ownership Trust, you may not need help finding a buyer, though you will still want experienced legal and tax advisers on the deal itself. Confidentiality is the recurring theme: news that a business is for sale can unsettle staff, customers and suppliers, so most processes run under non-disclosure agreements from the first conversation.
Heads of terms and the sale process
Once a buyer is seriously interested, you agree heads of terms (also called a letter of intent), a mostly non-binding document that sets out the headline deal: price, structure (share or asset), how and when it is paid, any conditions, and a period of exclusivity during which you deal only with that buyer. Heads of terms are the moment the deal takes shape, and it is the point by which your tax position should already be settled, because the structure you agree here drives what you pay in CGT.
From signed heads, the buyer runs due diligence while lawyers draft the sale and purchase agreement, the warranties (your promises about the business) and any disclosure letter (where you flag the exceptions to those warranties). This is usually the most intense phase, and it is where deals wobble. You will negotiate warranty and indemnity cover, any retention or escrow held back against future claims, and the mechanics of any deferred payment. Completion is the day the money moves and ownership transfers, but the process rarely ends there, because earn-outs and warranties can tie you to the business for months or years afterward.
Earn-outs and deferred consideration
Buyers rarely pay the whole price in cash on day one, especially where value depends on the business continuing to perform. An earn-out ties part of the price to the business hitting agreed targets after completion, typically profit or revenue over one to three years. It bridges the gap between the price you want and the price a buyer will guarantee, but it also means part of your money is at risk and, often, that you have to stay involved to earn it.
Earn-outs and deferred consideration carry real tax complexity. The treatment turns on whether the deferred amount is a fixed, ascertainable sum or an unascertainable right to future payments, which affects when the gain is taxed and whether Business Asset Disposal Relief attaches to the deferred slice. Getting the drafting wrong can strip relief off money you have not even received yet. Our detailed note on the tax treatment of earn-out payments covers this, and it is an area where advice before signing genuinely pays.
Timeline and typical costs
For a straightforward owner-managed company, a realistic timeline runs six to twelve months from decision to completion. Preparation and getting the accounts ready take one to three months. Marketing and finding a serious, funded buyer take two to four months. The stretch from heads of terms through diligence to completion takes another three to six months. An EOT or MBO can shorten the "finding a buyer" phase because the buyer already exists, but the funding and structuring absorb that saving.
On costs, budget for corporate finance or brokerage (retainer plus a success fee of roughly 3% to 10%), legal fees (often low tens of thousands on an owner-managed share sale, more if the deal is complex or contested), and tax advice on structuring the exit. That last item is the one owners most often skimp on and most often regret, because settling the CGT and BADR position before heads of terms typically saves many multiples of what the advice costs. Treat professional fees as an investment in a higher net figure, not an overhead.
Selling a business in your sector
The general journey above holds for every business, but valuation multiples, buyer types and diligence traps vary sharply by sector. A recruitment business is valued on its net fee income and the split between a sticky temp book and one-off perm placements. A manufacturer is valued on EBITDA plus asset backing, with the freehold and plant often valued separately. A care home is valued on EBITDARM and per-bed, with the CQC rating driving price. A law firm carries run-off insurance and SRA change-of-control approval. Each has its own decisive detail. We have sector-specific guides for selling a recruitment business, a manufacturing business, an ecommerce business, a construction business, a law firm, an accountancy practice, and a care home, each built around what actually moves value in that market.
Getting the right advice before you sign
Selling a business is a route with a lot of moving parts, and the two decisions that most affect what you keep, the route and the tax structure, are both made early, before heads of terms. That is the point to get advice, not after contracts are drafted. We help owner-directors plan and run their exit: deciding on readiness, comparing a trade sale, an EOT and an MBO, and, alongside our accountants, modelling the CGT and BADR position on each so you choose with the numbers in front of you. Whether you are two years out and want to make the business sellable, or you have an approach on the table, get in touch to book an exit and tax review, and we will run your actual figures.
A note on scope and regulation: advising on and arranging the sale of a company by way of its shares is an unregulated activity (it is exempt under Article 70 of the Regulated Activities Order), and that is what we do. We do not arrange, source or introduce the finance that funds a management buyout or acquisition, which is regulated credit-broking handled by an authorised commercial finance broker. This guide is general information at 2026/27 rates, not personal tax or legal advice, so take advice on your specific circumstances before you act.
Further reading and primary sources: gov.uk: Business Asset Disposal Relief; gov.uk: Capital Gains Tax rates and annual exempt amount; HMRC Capital Gains Manual CG63950 (BADR); HMRC Capital Gains Manual CG67800 (disposals to Employee Ownership Trusts); TCGA 1992 s.236H (EOT relief, inserted by Finance Act 2014 Schedule 37); and the House of Commons Library briefing CBP-10437 on Employee Ownership Trusts.