27 February 2026
There are many reasons that could prompt the sale of a business or company. These could be retirement, a change in market conditions, a health or family reason or because there is strong financial opportunity to capitalise on what has been built to date.
Formerly known as Entrepreneurs Relief (now Business Asset Disposal Relief), business owners could apply for a reduced rate of capital gains tax at the point of selling a business. Subject to meeting certain conditions, the rate was fixed at 10% up until the 2024 Autumn Budget. The rate increased to 14% from 6 April 2025 and is set to rise again to 18% from 6 April 2026. The rate applies to the first £1m of lifetime gains.
We have seen lots of clients moving forward with their sale plans to beat the 6 April deadline but whatever the driver for sale, preparing for sale is crucial to maximising the value received for your business.
The process
The sale process requires input from lawyers, accountants and most importantly the sellers themselves (it is time consuming!). Most sophisticated buyers will make an offer based on the net asset value or an EBITDA multiple on the understanding that completion accounts will be prepared to understand the final financial position of the business (between the date of offer and the date of completion). An astute seller should therefore have a good estimate of what the cash, debt, and working capital will look like by completion so they can plan for what a final sale price might be. As the gap between offer and completion is a moving part, completion accounts can adjust the sale price upwards or downwards. In most cases, a cash surplus = price up and a debt deficit = price down.
Between an offer being accepted and completion taking place, the legal process follows a generally accepted structure of entering into heads of terms and a confidentiality agreement, completing the buyer’s legal, commercial and financial due diligence process, drafting, negotiating and finalising the asset purchase or share purchase agreement, preparing all corporate governance and ancillary documents and gearing for completion. This process will usually take months to conclude and the heads of terms should plan for a realistic timetable.
Preparation for sale
In our experience, when acting on the sale side, deals can fall through because they take too long, there is a significant change in market or political conditions or the sellers have not prepared adequately and the buyer either reduces their offer or loses faith in the deal altogether.
As best practice, business owners should be able to put their hand on anything a buyer may reasonably request in due diligence. To give a few examples, sellers should be able to provide correctly completed and up to date company registers, evidence of all corporate and regulatory compliance, all material contracts (for clients, suppliers and services), all employment and pensions information and evidence that any intellectual property rights used in the business are protected or have due authority for the current use.
Key takeaways
When advising our corporate clients we always explore their short and long term goals and discuss when or what a good sale opportunity looks like. In our view it is always a healthy stance to have a sale strategy, even at the point of starting the business and then ensuring you have your ‘deal team’ around you to work towards and then in the arena when a buyer is found.
You never know when the market could be at its peak or how quickly appetite for acquisition could dissipate. A bit like investments, it takes a genius to time the market!
To discuss how we can help with an acquisition or sale, please contact Grant or the AMD corporate team on 0117 9733 989 or by email to commercial@amdsolicitors.com
