An introduction to exit planning for business owners

Three to five years where you have the choice, and the qualifying periods explain why. Business Asset Disposal Relief requires at least two years of holding the shares and voting rights before disposal, so eligibility cannot be created on the eve of a deal. Making the business less dependent on you and building a rising profit record take longer still. A buyer wants to see the pattern across several years. If a sale is already on the table and none of that has happened, the work still pays — it simply shifts from increasing the price to protecting it during diligence.

Broadly, maintainable profit multiplied by a number reflecting how risky those profits look to a buyer, then adjusted for cash and debt at completion. Neither half is fixed. Maintainable profit is your reported profit adjusted for owner-specific costs and one-offs, which is why clean records matter so much. The multiple moves with customer concentration, the quality of contracts, the strength of the team, and how much depends on you personally. Two businesses with identical profits can be worth very different amounts for those reasons alone — which is encouraging, because nearly every factor in the multiple is something you can work on before you sell.

For a share sale the main conditions are that the company is a trading company, that you have held at least 5% of both the ordinary shares and the voting rights, and that this has been true for at least two years to the date of disposal. Sole traders and partners disposing of a business have their own version of the test. The relief is capped at £1 million of qualifying gains across your lifetime, so earlier claims reduce what remains. Common ways to fall out of it include large cash or investment holdings undermining trading status, and share reorganisations that restart the two-year clock.

A share sale and a sale of the trade and assets are taxed differently for the seller and carry different risks for the buyer, so the structure is negotiated. Selling shares gives you one capital gain in your own hands and the possibility of Business Asset Disposal Relief. Selling the trade and assets means the company receives the money and is taxed on it, and you then still have to extract the proceeds from the company — a second tax event. Buyers push for assets because it leaves historic liabilities behind. The answer depends on structure and numbers, and it materially changes what you keep, so take advice well before heads of terms.

Then the centre of gravity moves from capital gains tax to inheritance tax and the gifting rules. From 6 April 2026, 100% business property relief applies to the first £2.5 million of qualifying business and agricultural property, with 50% relief on value above that, and any unused allowance can pass to a surviving spouse or civil partner. A lifetime gift of shares is still a disposal for capital gains purposes even though no money changes hands, although holdover relief applies in some circumstances. Alongside the tax, settle whether the next generation wants the business, whether they can run it, and what you will live on once you stop.

Three years of statutory and management accounts, the full tax position, customer and supplier contracts with their change-of-control terms, employment contracts, the lease, intellectual property ownership, a clean share register, and any personal guarantees. How long it takes depends almost entirely on how much of that already exists. A prepared business answers most of it in a fortnight from a folder assembled in advance. An unprepared one spends months reconstructing documents, and every delay hands the buyer another reason to revisit the price. Assembling that pack a year early is the cheapest protection of value in the whole process.