An approach from a buyer can arrive at an inconveniently persuasive moment.
You have had a demanding year. The buyer knows the sector. They have mentioned a number that sounds interesting and suggested a quick conversation. Sending over some accounts feels like a small next step.
It may be a genuine opportunity. It is also the start of a process in which the information you share, the terms you agree and the decisions you postpone can shape your choices later.
Selling a business in the UK involves several connected pieces of work: deciding what to sell, preparing the evidence, finding and assessing buyers, agreeing commercial terms, completing diligence and negotiating the legal documents. The sequence varies. A competitive sale process looks different from a negotiated deal with one existing buyer.
What matters is knowing which decision you are making at each stage, who is advising you and what remains unresolved.
Establish what is being sold and what you want from the deal.
A shareholder selling shares in a company is undertaking a different transaction from a company selling some or all of its business and assets.
That distinction affects the legal work, treatment of liabilities, transfer requirements and tax analysis. The appropriate structure depends on the circumstances of both parties. Get legal and tax advice before treating one structure as settled. GOV.UK distinguishes the responsibilities involved in a share sale and a company selling its business.
Set out your own requirements at the same time. These might include minimum cash on completion, an acceptable handover period, treatment of other shareholders or particular concerns about employees. Prioritise them. A negotiation becomes difficult when every preference is presented as equally essential.
If you are responding to an unsolicited approach, you can still pause to clarify these points. The buyer's preferred timetable does not remove the need to understand the transaction.
Put the right people around the owner.
The roles can overlap, particularly in smaller transactions, but somebody needs to own each part of the work.
| Workstream | Responsibility to make explicit |
|---|---|
| Sale strategy and buyer process | Buyer identification, approach strategy, offer comparison and commercial negotiation |
| Financial preparation and support | Reliable records, financial analysis, forecasts and responses to buyer questions |
| Legal | Structure, confidentiality, documents, consents, disclosure and contractual protections |
| Tax and personal planning | Tax consequences, timing, relief eligibility and the owner's wider financial requirements |
| Day-to-day trading | Sales, delivery, people and cash while the transaction proceeds |
Ask advisers about transactions relevant to your business, their actual role and who will do the work. Understand fees as well as credentials. If a success fee applies, ask what value it is calculated on, when it becomes payable and how deferred or contingent consideration is treated.
The owner needs a clear coordination arrangement. It is expensive to discover late in the process that everyone thought someone else was examining an important issue.
Prepare enough information to support the story you want to tell.
A buyer presentation usually makes claims about the company's position and prospects. Each material claim should connect to evidence.
If you say revenue is recurring, explain the contractual or behavioural basis. If you say margins are improving, show the figures and what changed. If your forecast depends on new customers, distinguish signed work, credible opportunities and broader ambition.
Examine the financial records before a buyer does. Can monthly accounts be reconciled? Are significant earnings adjustments supportable? Can management explain debt, cash requirements and customer concentration?
You do not need to pretend there are no weaknesses. You need to know which issues exist, how material they are and what you are doing about them. Our sale-preparation checklist sets out the earlier work in detail.
Decide how to approach buyers and control the information flow.
A relevant buyer list should have a commercial rationale. Who would understand the business, benefit from owning it and have the ability to complete the transaction?
Some owners will pursue a wider process with their adviser. Others will negotiate with a single credible party. Discuss the trade-offs, including confidentiality, management time and the alternatives available if negotiations stop.
Before sharing sensitive information, put appropriate confidentiality arrangements in place. Then agree what each stage of the process requires. A potential buyer may need a high-level customer concentration analysis before it needs the identity and detailed pricing of every customer.
Be especially thoughtful where the buyer is a competitor. Ask your advisers how commercially sensitive information should be handled, and whether access needs to be restricted to particular people.
Personal data also needs specific attention. A transaction does not remove data-protection responsibilities. Identify what you are sharing, why, the relevant lawful basis and the controls around access. The ICO provides guidance on data sharing in mergers and acquisitions.
Assess the buyer's ability to deliver its offer.
A large number deserves questions about funding, approvals, conditions and timing.
Who has authority to approve the acquisition? Is funding available or still being arranged? What diligence remains? Does the buyer need important customer consents? How dependent is the proposal on you staying? What happens if the timetable slips?
Compare offers on those points alongside price. A higher maximum consideration may include a substantial earn-out. Another offer may provide more cash at completion but require different compromises elsewhere.
I would put competing proposals into the same table, with a separate line for every material condition. A number becomes easier to assess once the assumptions around it are visible.
Get advice before agreeing heads of terms.
These documents normally record the principal commercial points. They may also include binding provisions, such as confidentiality or exclusivity, even where the proposed sale itself is not yet binding. Your lawyer should make the intended effect clear. Stevens & Bolton explains the distinction.
Understand what the price means. Is it an enterprise valuation or consideration for your shares? What assumptions apply to cash, debt and working capital? When is payment due? Which parts depend on future events?
If the buyer wants exclusivity, examine the duration, the work it will complete during that period and what happens when deadlines are missed. Treat an extension as a fresh decision. By then, you should have more information about the buyer's progress and the remaining obstacles.
Organise diligence so the business can keep trading.
Financial, tax, legal, commercial and operational investigations may run at the same time. The buyer's needs will depend on the business and transaction.
Use one coordinated request list. Assign each request, record what was provided and identify who can approve the answer. Distinguish a missing document from a question that requires analysis or legal advice.
When a buyer questions a figure, establish whether the problem is an error, a difference in definition or a genuine commercial disagreement. Those require different responses. Sending more spreadsheets without resolving the distinction can make the conversation harder.
Consider an illustrative situation: a forecast includes revenue from a contract that has not yet been renewed. The buyer may challenge the forecast, request evidence of renewal prospects or revisit the terms. The useful response is to examine the contract's status and the effect of the possible outcomes. Calling the buyer unreasonable will not supply the missing evidence.
Keep a regular trading update running throughout diligence. If a customer leaves or costs rise, understand the impact and discuss the appropriate response with your advisers. Decisions made to protect the transaction should not leave the operating business unattended.
When an answer changes, identify the earlier response it replaces and explain the reason. An updated forecast buried in a folder can leave the buyer's financial team working from one version while its lawyers use another. Keep a record of significant revisions and make sure they reach the people relying on the information.
Translate the commercial agreement into documents you understand.
The sale agreement contains the machinery that determines what happens when reality differs from the parties' expectations.
Ask your advisers to explain the important provisions through examples. What would trigger a warranty claim? How will a known issue be disclosed? What does an indemnity cover? Which limits and time periods apply? How could a dispute affect a deferred payment?
Warranties, indemnities and disclosure have distinct legal effects. The detail and the transaction's governing law matter. A recent UK judgment discussed by Stevens & Bolton illustrates why the agreed scope of disclosure cannot be treated as an administrative afterthought. Read its analysis of warranties and disclosure.
Do the same exercise with the price mechanism. Completion accounts use the agreed accounting framework to determine relevant balances at completion, with adjustments then resolved through the contractual process. A locked-box arrangement generally fixes the equity price by reference to an earlier balance sheet and includes protections around value leaving the business afterwards. Your advisers should explain the mechanism chosen and the obligations it creates. ICAEW describes both approaches.
The operational plan matters too. Who informs customers? Which employees need information or consultation, and when? What needs to be ready for payroll, bank access and service delivery? Employment-transfer rules may apply to a business transfer; a pure share transfer will generally involve different considerations because the employer may remain the same. Acas explains when TUPE can apply.
Completion needs a practical checklist as well as signatures.
Signing and completion may happen together or be separated by conditions that still need to be satisfied.
Before completion, understand the funds flow: who pays whom, which debts are repaid, which costs are deducted and what reaches each shareholder. Ask for releases or other arrangements for personal guarantees and security to be dealt with explicitly where relevant.
Confirm the handover responsibilities, access arrangements and communications. Someone needs to know what happens the following morning, including how customers are served and decisions are authorised.
There may also be work after completion: agreeing completion accounts, meeting handover obligations, monitoring deferred payments or preparing earn-out calculations. Keep the records and access needed to fulfil those responsibilities.
The best starting point depends on where you are today. If you have no buyer, focus on preparation and the route to market. If an offer is already on the table, establish the structure, confidentiality, payment terms and adviser responsibilities before moving further.
Northbound supports the financial preparation and business understanding behind a transaction. If you are considering a sale or responding to an approach, talk to us about the stage you have reached and the support needed alongside your legal, tax and transaction advisers.