Financial Insights

Selling your business: How to prepare for the exit

5th Aug 2023

6 minute read

Mariel Diez

Mariel Diez

Head of content

Compare Wealth Managers

Stewart Sanderson

Stewart Sanderson

Senior Private Client Director

Brooks Macdonald

Rosie Bullard

Rosie Bullard

Partner ‑ Portfolio Manager

James Hambro & Partners

Ann-Marie Atkins

Ann-Marie Atkins

Managing Partner

Evelyn Partners

Gareth Jenkins

Gareth Jenkins

Director - Financial Planner

James Hambro & Partners


Many entrepreneurs don’t start a business with the end in mind, so they might need to reconsider the way their company is structured and how they can extract some wealth for themselves


If you are an entrepreneur who has successfully expanded your company past the first day of existence, you may also be considering retirement as a chance to sell your company so that it can carry on without you. Many also consider selling to embark on a new adventure, or simply because the chance came along. Whatever the reason, there are many key factors to consider before you sign the deal.

“Before anything else, preparation is the key to success”

Alexander Graham Bell knew he needed to be well-prepared to succeed when it came to starting a new project, and that applies not only to the success of the business in general but the preparation for a successful sale. Thus, preparation for a potential sale starts long before an offer has been made, meaning developing relationships with advisers early. Rosie Bullard, Portfolio Manager and Partner at James Hambro and Partners, reminds us that a good relationship with advisers is key. “It's important for entrepreneurs to take time to meet a range of advisors and establish with whom they would like to work. The relationship and trust are essential.”

Similar advice is shared by Stewart Sanderson, Senior Private Client Director & Head of UK Private Clients at Brooks Macdonald. “Invest in a (business) plan with both a short-term and a long-term strategy. This means looking at your current position and thinking about where you’d like to be in the future. But most importantly, ask yourself why you are selling your business and build your plan after that. This is commonplace in your corporate planning but rarely prioritised for personal wealth”.

It's a team effort

Reviewing the offer carefully and preparing the exit plan is a must, but other things need to be taken into consideration. “Taking that step requires a lot of previous preparation, and for that, there needs to be skilled legal, accounting and wealth management teams working with the individual beforehand”, Rosie reminds us.

Ann-Marie Atkins, managing partner at Evelyn Partners, proposed a list of steps that need to be considered during the pre-sale period, and that begin precisely with legal and accounting due diligence, including negotiation and drafting legal documents. Both the business and the owner should be in a strong position to start discussions if the necessary pre-exit reviews, planning and structure have been completed. “Many entrepreneurs don’t start a business with the end in mind, so they might need to reconsider the way their company is structured and how they can extract some wealth for themselves” warns Atkins. “Pre-exit you've got some opportunities to make decisions that you cannot do once you've entered a binding contract of sale. If you want to put assets into a discretionary trust or create a benefit for your employees, you need to prepare beforehand, and you need the right people to advise you on how to prepare and accommodate that”.

The usual process of preparing a business for an exit, according to Atkins, follows these steps:

  1. Legal and accounting due diligence
  2. Surplus cash extraction
  3. Business continuity plan
  4. Pre-sale/cashflow planning/gift considerations
  5. Change of ownership/shares/tax clarity
  6. Wills and power of attorney
  7. Financial and investment plan

To get the business to the point where you’ll get the most out of the sale, you need at least two years to prepare, ideally three, according to the experts. During that time, a well-qualified team will provide you with the best advice possible at all levels. Sanderson adds: “At one point there's going to be a transaction, so make sure long before that that the corporate structure is the right one from a tax perspective, and that the lawyers and the accountants have been upgraded. If you started this as a “mum and pop” business or just an idea that has grown rapidly, the local solicitor may not be familiar with the advice needed for this type of business transaction. Therefore, it's critical to lay the foundations early on, ensuring the more efficient path taken, with a sensible structure created to deliver the best outcome”.

What’s the best type of exit for you?

As well as taking care of your team and your finances, time should be taken to consider the best exit strategy for you and the business. There are various choices available, so it's crucial to think about which strategy is best, such as:

• An external exit via a trade buyer or private equity

• A structured exit, either through an employee ownership trust or management buyout

• Family succession

The chosen plan needs to consider what you as an entrepreneur want to do post-exit. Atkin’s exit steps also cover this as "business continuity planning”: You need to consider if you want to reinvest -whether that is starting a new venture or being an angel investor-, staying in the business in a consulting role, setting a charity trust –which would also allow you to invest and make that pot grow- or simply creating a portfolio that allows you to continue having the same living standard pre-sale.

Consider all possible outcomes!

You need to consider that it might not all go according to plan, even during the preparation for the sale. It is important that you have advisers with whom you can discuss potential scenarios in the future and cash flow planning can be a useful tool in this regard. Gareth Jenkins, Director at James Hambro and Partners, says that “ideally entrepreneurs should come to see us long before the sale” and that having strong legal and tax advisors will help ensure your post sale structuring is optimised for your personal objectives. “When discussing objectives with clients, most entrepreneurs will typically have two primary objectives post sale, firstly ensuring they have enough funds to ensure they can meet their own expenditure for the rest of their lives, and secondly how to maximize the level of wealth that passes on to the next generation and intended beneficiaries. The weighting of these objectives will often change over time and is analysed as part of the review process.”

How do you make sure that your children don't see the wealth coming from a substantial sale in a way that means they don't lose their aspirations? Jenkins suggests that starting to run smaller investment portfolios for your children to get them used to how investment markets work can be sensible.

“Education is key”, remarks Sanderson, and leaves us with the most important piece of advice on how to prepare for exiting your business: “Don't be afraid to take your time. There are important factors to consider, such as maximising your pension contributions, maximising any allowances for previously unused years. Now more than ever, pension planning is complex, if there’s family involved in the business there may also be broader allowances to consider, these things require time and analysis”.

Make sure you are surrounded by the right people during the entire process of selling your business, and we at Compare Wealth Managers offer you an impartial and un-intimidating route to finding a Wealth Manager suitable for your needs. We have carefully selected a portfolio of wealth manager partners including Wealth Management firms and Private Banks who, together, offer our clients a full spectrum of services.


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