Most business sales lose value in due diligence. Not because of awkward buyer questions, but because the seller is meeting them for the first time and answering them badly.
Owner-managers tend to start thinking about selling when retirement comes into view, or when an unsolicited buyer turns up. The best outcomes go to the ones who started years earlier. The work that genuinely moves price (cleaning up corporate housekeeping, reducing customer concentration, building a management team that runs the business without you) only shows up in the numbers if you give it time.
Here’s how we walk our clients through it.
Why the timeline matters
Buyers expect to see at least two to three years of clean trading and legal history. A frantic clean-up two months before going to market itself reads as a red flag. Beyond that, the operational moves that genuinely improve a sale price (reducing customer concentration, stepping back from day-to-day operations, formalising contracts) take time to bed into the numbers.
Tax timing is the other reason to start early. Business Asset Disposal Relief (BADR) requires a two-year qualifying period. For non-EMI shares, the personal-company test is stricter than many sellers expect: 5% ordinary shares by nominal value, 5% voting rights, and one of two alternative economic entitlement tests. The economic entitlement test is met by either 5% of sale proceeds, or by 5% of distributable profits and 5% of assets on a winding up. Owners with growth shares, alphabet structures or family trusts often discover late that they don’t actually qualify. Reviewing this early gives time to restructure if needed.
The BADR rate has also moved. From 6 April 2026 it stands at 18% (up from 14%), with the £1 million lifetime limit unchanged. Worth noting: signing the SPA before the rate-change date doesn’t lock the old rate in. CGT is generally taxed at completion, not exchange.
Business Property Relief (BPR) has shifted too. From 6 April 2026 the 100% relief is capped at £2.5 million of qualifying business property per individual, with 50% relief above that level. Spouses can combine their allowances, so a couple may pass on up to £5 million of qualifying assets at the 100% rate before Inheritance Tax bites. For family-owned businesses, succession planning and sale planning are now properly the same conversation.
Three years out: build the foundation
This is the structural work, and it’s where the biggest dividends sit.
Corporate housekeeping. Companies House filings up to date. Minute books complete. Statutory registers accurate. Historic share transfers properly documented. We routinely find a “share issue” from 2014 that was never recorded, or a transfer that was discussed but never executed. Unpicking those things in the middle of due diligence is expensive and slow.
Shareholder agreement. Are your articles and shareholder agreement still aligned with your current shareholder base? Are drag-along and tag-along rights drafted in a way that actually facilitates a sale, or written so loosely they create options for awkward minorities? If you don’t have a shareholder agreement at all, now is the time. Putting one in place a year before sale is uncontroversial. Doing it a month before raises questions.
BADR qualification check. Confirm every shareholder you expect to claim BADR will pass the personal-company test. Look at share classes, voting rights and economic entitlement carefully. If anyone falls short, there is usually a fix: share reclassifications, restructuring of holdings, EMI options for key managers. But each fix needs runway.
Intellectual property. Make sure all IP used by the business is owned by the company that’s being sold. IP held personally by founders, or stranded in dormant subsidiaries, is a price chip waiting to happen. Formalise licences where there’s any sharing across group companies.
One year out: get diligence-ready
The focus shifts from structure to making the business easy to buy.
Clean up the financials. Strip out personal expenses, one-off costs, related-party transactions that wouldn’t survive in a stand-alone business. Buyers and their accountants will normalise the EBITDA anyway. You might as well do the work yourself, where you control the narrative. Where related-party arrangements need to continue post-completion (typically property leases), formalise them on arms-length terms now.
Reduce concentration risk. Most owner-managed businesses have one or two structural risks that buyers will discount value for: a single customer over 25% of revenue, a single site, a founder who is the business. None of these are quick fixes. Some are years of work. But identifying and addressing them before the buyer raises them changes the tone of the entire diligence conversation.
Contract review. Pull every customer contract, supplier agreement, finance facility, and lease, and check three things: change-of-control provisions, counter-party guarantees, and consents required on a sale. The change-of-control list determines what can be done post-completion versus what needs counter-party engagement before exchange.
Property. Whether the trading entity holds a freehold, holds a leasehold, or pays rent to a connected entity, the structure has implications for the deal and the post-completion tax position. Worth a hard look at this point. Separating the freehold into a holding entity often makes both sides of the deal easier and may improve the tax outcome on sale.
Regulatory licences and approvals. Identify everything the business needs to operate legally: sector licences, FCA permissions where relevant, ICO registration, professional indemnity insurance. Check whether each survives a change of control. Some require notification, some require approval, some require fresh registration by the buyer’s entity. Building these into the deal timeline early avoids nasty surprises near exchange.
Three to six months out: execution mode
By this point the work shifts from strategic to tactical.
Get the adviser team coordinated. Corporate lawyer, tax adviser, accountant, and where relevant, financial adviser or wealth planner. The single biggest source of avoidable delay in a deal is advisers who haven’t spoken to each other before the SPA appears. We sit inside the Fusion Consulting Group, which means tax, accountancy and financial-planning colleagues are down the corridor. The principle is the same whoever runs your tax and finance work: get them in the same room early.
Lock down the tax planning. Confirm BADR positions for each shareholder. Decide deal structure with an eye on tax: share sale versus asset sale, the consideration mix, the treatment of any earn-out. Ascertainable and unascertainable earn-outs are treated differently for BADR; getting that wrong is expensive. Where part of the consideration is being taken as buyer shares, the share-for-share exchange under TCGA 1992 sections 135/136 needs to be structured carefully (often miscalled “rollover relief”).
Build the data room. Upload the full set of corporate, commercial, financial, employment, property and IP documentation. Run a self-diligence pass to find the gaps before the buyer does. Anything that needs fixing (undocumented historic transactions, missing executed copies, dated policy documents) is far cheaper to address before the buyer’s lawyers are billing by the hour.
Plan for the people. On a share sale, employees stay with the same legal entity; the issues are retention, communications, and historic employment liabilities. On an asset sale, TUPE engages and the employee population transfers by operation of law, with information and consultation obligations on both sides. Either way, decide early which conversations happen pre-exchange (typically a small group of senior managers under NDA) and which wait until completion.
When the deal starts
Once a buyer is interested, the process generally runs: NDA, then heads of terms, then due diligence, then the SPA and ancillary documents, then the disclosure letter, then exchange and completion. Where shares are being held back as deferred consideration or earn-out, there will be ongoing protection mechanics on top: escrow, set-off, performance covenants.
Two parts of the deal need most of the seller’s attention.
The disclosure letter. The seller’s main protection against warranty claims. The principle is straightforward: if a fact is properly disclosed, the buyer can’t claim breach of warranty for it later. The art is in the detail. Disclosures need to be specific enough to be effective, but you don’t want to disclose your way into a price reduction that’s already been agreed. This is where seller experience really shows.
Earn-outs and deferred consideration. Earn-outs bridge valuation gaps but they create real tension after completion: the buyer is now running the business, the seller’s payout depends on its performance, and the protections needed run into double figures. Definition of the metric. Control over decisions affecting the metric. Audit rights. Dispute mechanics. Treatment on a sub-sale. The BADR consequences of the structure. Plan these carefully and write them tightly.
After completion
Completion isn’t always the end. If you’re staying on through a transition period, retained as a consultant, or with part of the price tied up in earn-out, there are restrictive covenants to live with, customer and supplier handovers to manage, and ongoing reporting on the earn-out side.
For most owners, attention now shifts to the proceeds: investment planning, family wealth structuring, and inheritance tax planning under the new BPR framework. These conversations are easier when they’ve been started months before completion rather than weeks after.
The practical takeaway
If you’re contemplating an exit in the next one to three years, the single most useful thing you can do this quarter is start. The work that materially affects deal value (corporate housekeeping, BADR qualification, customer concentration, management team development) needs runway. Buyers are noticeably more confident, and pay better prices, where the seller has clearly run the process.
Fusion Law advises business owners, entrepreneurs and investors on preparing for sale and seeing transactions through. We sit inside the Fusion Consulting Group, which means tax, accountancy and financial-planning colleagues are down the corridor. Useful, because exit planning rarely sits within a single discipline.
If a sale is on your horizon, get in touch. Direct call beats a long email exchange.
Please read our more detailed client guide on preparing your business for sale.
Disclaimer: This article is for general information purposes only and does not constitute legal, tax, or financial advice. Tax rates, reliefs, and legislation are stated as at May 2026 and are subject to change. Fusion Law is the trading name of Fusion Law Ltd, authorised and regulated by the Solicitors Regulation Authority (SRA No. 822590). For advice specific to your business or circumstances, please contact Fusion Law directly.
