A checklist for selling your business

You'll probably only sell a business once, so most of the steps are new. Your advisers know the order, but it helps to have your own list, so you can see what's coming and what you're waiting on. This checklist follows the order things usually happen when a limited company is sold in the UK, with notes where an asset sale differs.

It's a list of jobs and decisions. For the papers a buyer will ask to see, use the document checklist in our guide to due diligence.

Before you talk to anyone

The decisions here shape everything after. They're also the ones that are hardest to change once a buyer is involved.

• Write down whether you want to sell all of the business, part of it, or in stages.
• Decide how long you'd stay after a sale, and in what role.
• Work out the figure you need after tax, which isn't the same as the price.
• Talk to your accountant about the tax. Business Asset Disposal Relief has conditions that must be met for two years before the sale, so check them early.
• Talk to any co-owners, and to family who work in the business or depend on it.
• Read your articles and any shareholders' agreement for rules on selling shares.
• Decide whether to use a broker or corporate finance adviser, or to sell privately.

Getting the business ready

Allow a year or two for this if you can. Our guide to preparing a business for sale covers each point in detail.

• Produce monthly management accounts that agree with the year-end accounts.
• Separate personal and one-off costs, so the business's own profit is clear.
• Hand day to day dealings with customers and suppliers to others, so it runs without you.
• Put arrangements with customers and suppliers in writing, and check for change of control clauses.
• Make sure every employee has an up to date written statement of their terms.
• Bring company records up to date, including the register of members and the information Companies House holds. Directors now have to verify their identity before the company's confirmation statement is accepted.
• Check the lease, including how long is left and whether you'd need the landlord's consent.
• Settle any disputes you can, and fix what an outside review would pick up.

Choosing your advisers

Bring your accountant and solicitor in at the start, not once a buyer has made an offer. Changing the structure of a deal costs little before heads of terms and a lot after.

• An accountant who has worked on business sales, for the figures and the tax.
• A solicitor who does company sales, not only general business work.
• If you want one, a broker or corporate finance adviser to find buyers and run the sale.
• Engagement letters for each, setting out the work and the fees in writing.
• One trusted person inside the business to help, under a confidentiality agreement.

Valuing the business and finding a buyer

Any figure you get now is a range. Use it to check that a sale would give you what you need, and keep it to yourself until buyers have seen the business for themselves.

• Get a rough value range. Our guide to how to value a business explains how buyers work it out.
• List likely buyers, including anyone who has approached you before.
• Prepare a short summary that doesn't name the business, then fuller information later.
• Ask every buyer to sign a confidentiality agreement before you share detail.
• Share in stages, keeping customer names and salaries until heads of terms are agreed.
• Keep running the business well. Results during the sale are checked closely.

Offers and heads of terms

• Compare offers on how and when the price is paid, not only the headline figure.
• Ask how each buyer will pay for the business, and check it.
• Get tax advice on the structure before you agree it.
• Agree heads of terms covering the price, payment, your role, conditions, the timetable and how long exclusivity lasts.
• Make sure exclusivity ends if the buyer misses agreed dates.

Due diligence and the legal documents

This stage can take the longest, and it's where a price agreed in heads of terms can slip. Quick, complete answers keep the timetable and the price where they were.

• Have the data room ready before the buyer's questionnaire arrives, so the first answers are quick.
• Decide who answers questions, and who covers their day job while they do.
• Ask for the buyer's timetable for due diligence, and hold them to it.
• Start your list of disclosures early. Disclosing properly is your main protection.
• Review the sale agreement with your solicitor, especially the warranties, indemnities, limits on claims, price adjustments and restrictions on you after the sale.
• Agree the terms of your role afterwards, whether as an employee or a consultant.
• If you're keeping a share, agree a shareholders' agreement at the same time.

Consents and approvals before completion

Some sales sign and complete on the same day. Others sign first and complete once conditions are met. Either way, these are the things that can hold a sale up.

• Your landlord. An asset sale usually needs consent to assign the lease. Where the lease says consent can't be unreasonably withheld, the landlord must decide within a reasonable time. Some leases need consent to a change of control in a share sale.
• Lenders. Loans are often repaid at completion. Ask for any personal guarantees you've given to be released at the same time.
• Customers and suppliers. Contracts may need consent to a change of control or to transfer to the buyer.
• Regulators. If your business is regulated, check whether the regulator must approve the buyer or be told. A change in control of an FCA-regulated firm needs approval, and the FCA has up to 60 working days from a complete notification to decide.
• HMRC. If your adviser recommends tax clearance, HMRC says it will reply to a statutory clearance application within 30 days.
• Staff, in an asset sale. Your team moves to the buyer under TUPE. You must give the buyer employee liability information at least 28 days before, and inform staff, or their representatives, in time to consult them before the transfer.

Completion day

• Sign the documents, and have the board meetings and resolutions the solicitors prepare.
• Receive the money due at completion, usually through the solicitors.
• In a share sale, sign a stock transfer form. The company updates its register of members.
• Resign as a director if you're leaving. Companies House must be told within 14 days.
• Make sure changes to people with significant control are reported to Companies House within 14 days.
• Hand over bank mandates, passwords, keys and records, and change who can sign.
• Check the release of any personal guarantees has been signed.

In a share sale, the buyer pays the Stamp Duty and sends the stock transfer form to HMRC within 30 days of it being signed and dated.

Telling people

• Agree with the buyer who tells whom, and when.
• Tell your staff first if you can, before they hear it anywhere else.
• Then key customers and suppliers, ideally with the new owner beside you.
• Keep the message about what stays the same as well as what changes.

Agree a short holding line with the buyer in case word gets out before you're ready. It's much easier to keep to a line you've agreed than to make one up on the spot.

The year after completion

It's easy to stop paying attention once the money arrives, but several deadlines fall in this year. Put the dates in your diary on the day you complete.

• Do the handover you agreed, and keep a note of what you've passed on.
• Track any deferred payments and earn-out targets, and the figures they depend on.
• Check completion accounts, if your deal has them, within the time the agreement allows.
• Keep a full set of the signed documents and the disclosure bundle.
• Note when the buyer's time to bring warranty claims runs out.
• Note when the restrictions on you, such as a non-compete, come to an end.
• Report the gain to HMRC, through Self Assessment or the real time Capital Gains Tax service. Tax on the gain is due by 31 January after the end of the tax year you sold in.
• Claim Business Asset Disposal Relief on your return, if it applies.
• Plan what you'll do with the money and your time, with your own advisers.