What’s the protocol when you want to sell your limited company?

A business sale is a strategic exit option for owners who are ready to step back from running their company but want to ensure the legacy continues under new ownership.

Selling a business allows shareholders to cash out on their investment and hand over the reins to a buyer with an appetite for entrepreneurship.

To kickstart the business sale process, consider the available routes.

In this guide, Shaun Barton, a corporate insolvency expert at Company Closure, details the journey to selling a business and how this can be achieved.

What routes are available for selling your company?

Selling a business is an ideal way to dispose of a company as it involves generating a return and offers an alternative to closing a limited company.

We look at the different routes to selling a business, including appointing a business sale agent, the DIY approach, an online sale, and a private sale.

Business sale agent

While the business sale market is widely accessible, tapping into the expertise and connections of a business sale agent can speed up the process and increase the likelihood of finding a buyer, or even multiple buyers, that are an ideal match.

A business sale agent, also known as a business transfer agent or a business broker, typically offers an end-to-end service that covers the complete business sale journey, including:

• Preparing the business for sale
• Business valuation
• Due diligence
• Producing advertising materials, including arranging professional photography
• Expertly advertising to a network of potential buyers and professional intermediaries
• Third-party referrals, such as legal services and business finance

Reputable and well-connected business transfer agents can use their experience and connections to find a buyer for your business.

Many business brokers retain a database of registered buyers who are notified without delay when a business of their specification is listed for sale.

By appointing a business transfer agent, you can access a wealth of connections and delegate business selling duties to industry specialists.

DIY approach

The DIY approach entails adopting the duties of multiple professionals to prepare your business for sale, conducting the necessary due diligence, finding a buyer, negotiating a competitive price and sealing the deal.

This route is advised for individuals with the technical expertise and experience to navigate the business sale journey. If you’ve found a buyer, you may consider taking the DIY approach to cut out any intermediaries.

While this can save costs, you must seek qualified support to ensure that the business valuation is correct, the buyer is genuine, and the contracts are watertight.

Online sale

Online marketplaces for buying and selling businesses have gained popularity over the years because they are simple, accessible, and value for money.

Instant access means you can advertise your business for sale at the click of a button and let the online portal do the rest.

Build a profile for your business and once active, any interest from potential buyers will be delivered straight to your inbox.

Private sale

A private sale is when you sell your business privately, which is often the case when you have already secured a buyer.

You may consider appointing professionals to manage technical areas of the sale, such as a solicitor to prepare contracts and run due diligence or business valuers to calculate how much your business is worth.

Check out ByteStart’s guide to valuing a small business.

Selling a business – what next?

If you’ve decided on an approach to selling your business, the next step is preparing it for sale. Get your business in optimum shape to maximise market value and make a positive impression on buyers.

If you appoint a professional advisor, they will likely advise you on preparing your business for sale.

Here are some final steps – written by the ByteStart team – to help you prepare your business sale.

• Sort out your paperwork: Make sure your financial records, including accounts, tax returns, and other official documents, are up-to-date. Having this data ready is crucial, whichever route you take to sell your business.
• Boost the value of your business: Before you sell, try to increase the value of your business. This might mean cutting unnecessary costs, improving customer relationships, or renewing key contracts.
• Get expert advice: Get professional advice to work out the tax implications of selling your business. Do you qualify for BADR (previously known as Entrepreneurs’ Relief?)
• Screen potential buyers: To avoid wasting time, ensure any interested buyer has the money and the right intentions to proceed with the purchase. If you use an intermediary, they will do this for you.
• Negotiate the terms: Discuss and agree on the important details, like the final price, how payments will be made, and any role you might play after the sale (such as staying on temporarily to help with the handover).
• What happens after the sale: How will the transition work in practice? You might agree to stay on for a short time to help with the transition. What will you do with your time after you’ve sold your business?