FAQ - Frequently asked questions about selling a business

Click on the questions below to get answers to the most frequent questions we get asked.

If you have a specific question, not answered here, then please contact me using the contact page.

  1. Is my business saleable?
  2. How much is my business worth?
  3. How do you value a business?
  4. When is the best time to sell my business?
  5. How long does it take to sell a business?
  6. Selling the shares in a limited company or assets and good will. Which is best?
  7. Can you sell a minority shareholding?
  8. What tax will I have to pay on selling my business?
  9. Why use a business broker?
  10. How do I choose a business broker?
  11. What information will I have to provide?
  12. Should my accountant sell the business for me?
  13. What kind of businesses do you sell?
  14. What size companies do you sell?
  15. Do you offer advice to buyers?
  16. Why would I use Lucas & Weston?
  17. Do I need a solicitor and accountant?
  18. What is an executive summary or teaser document?
  19. What is an NDA?
  20. What is an IM?
  21. How do you keep my business sale confidential?
  22. What is a MBO, MBI and BIMBO?
  23. How do you find me a buyer?
  24. How are meeting held and managed?
  25. Who will handle the sale for me?
  26. How will I know what is going on?
  27. What are your fees?
  28. I tried to sell before and nothing happened. Can you help?
  29. I've been approached about selling. What should I do?
  30. What are the main reasons businesses don't sell?
  31. How much time will I have to put into the process?
  32. What are 'heads of terms'?
  33. What is an SPA, and who does it?
  34. What is due diligence?
  35. What are Warranties?
  36. What is a disclosure letter?
  37. How long is the legal process?
  38. Do you help with all of this?
  39. How do I get started?

Is my business saleable?

In our experience, nearly all businesses are saleable if they are priced correctly and are presented to enough people in the right sectors. Even if the business makes a loss.

It is highly recommended that you have a thorough market appraisal and valuation prior to attempting to put a business on the market. It can help highlight areas which, if left unchecked, could cost you thousands of pounds, cause unnecessary delays or even stall a sale.

For further information visit our sister website www.businessvaluationreport.co.uk

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How much is my business worth?

A well known rule of thumb is 'as much as a willing buyer is prepared to pay for, and a willing seller is prepared to sell for'. In reality, it is worth what anyone will pay following a sustained and inclusive marketing campaign having created a competitive selling environment. That said, many factors can determined business value. These include cash flow, sustainable profit, asset value, financial history, location, competition, customer base, industry standards, ongoing management and the economy.

What you think your business is worth makes little difference, and potential buyers will place little credibility in a value arrived at by your accountant or bank manager. Only the marketplace can decide its true enterprise value. Incorrect value and unrealistic vendor expectations are the principal reasons many business sales fail. A buyer will dismiss your business if it is not priced reasonably.

Please see our valuation page for more information.

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How do you value a business?

Valuing a private business is not an exact science. To do it accurately and consistently requires experience, industry knowledge and the ability to analyse and closely examine all the factors involved.

Value can be determined by many factors including growth potential, cash flow, potential economies of scale, sector trends and activity, sustainable profit, asset value, financial history, location, competition, customer base, ongoing management, desirability and the economy.

You can read more about business valuation at our specialist site www.businessvaluationreport.co.uk

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When is the best time to sell my business?

This very much depends on your personal circumstances and objectives. Generally, when it is doing well, and you don't have to. Selling before a peak can add value to your business too - timing is key here. Obvious as it is, the decision to sell your business is not one which should be taken lightly. Plan and prepare your business well in advance. Haphazardly going to market can seriously undermine your chances of success. It is possible to sell most businesses if prepared, structured and priced correctly.

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How long does it take to sell a business?

It depends on the market conditions and what is for sale. Our typical business sale takes between five to eight months from start to finish. You should allow a full year. In most cases, we are talking to the eventual purchaser within the first six to eight weeks.

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Selling the shares in a limited company or assets and good will. Which is best?

For shareholders of a limited company, there is a choice in how their business can be sold. The company (a separate legal entity) can sell its assets and goodwill, or the shareholders can sell their shares in a share transfer.

Following the money is a good start to illustrate the difference. For an asset and goodwill sale, the sales proceeds are paid to the company. For a share transfer, the consideration will come directly to you as the shareholder.

An asset and goodwill sale is a quicker legal process, avoiding many of the legal issues associated with a share sale.

There are pros and cons to each type of sale for both buyers and sellers. The tax treatment for both is different too, and careful consideration should be given as to which is the best route for your circumstances.

You can keep your options open until drafting the sale terms. Your and the buyer's objectives will dictate which is the best course to follow and keeping an open mind can often create a better deal structure.

We can help you with both, so contact us for advice on your particular position. We’d be happy to help.

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Can you sell a minority shareholding?

Depending on the Articles of Association for the company, it is possible to sell a minority shareholding. With small private companies there is often no or little ready market for the shares. This is one the principal reasons valuations of minority shareholdings usually get heavily discounted.

We don't get involved in companies looking to sell minority shareholdings (less than 50%) or which don't lead to control of the business. This is considered a regulated activity as it is classed as investment business.

Specialist advice is recommended. For more, visit www.businessvaluationreport.co.uk

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What tax will I have to pay on selling my business?

The tax implications of selling a business will depend on your personal circumstances. Some form of tax is inevitable, and it is vital you get advice on the tax regime applicable to you. Ideally you should get this advice at the outset, as it can have an impact on how best to structure a deal/sale.

Currently, within the UK, the tax on limited company sales or qualifying assets is still favourable to the seller – with capital gains tax from as low as 10%.

Specialist tax advice is highly recommended as part of your preparation for sale process.

Further information can be found at: HM Revenue & Customs - Capital Gains Tax Page

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Why use a business broker?

A good broker should be able to find buyers beyond the obvious - buyers you couldn't find on your own. The more choice of buyers you have, the better negotiating position you can command, enabling the best possible deal.

Experienced of running a competitive sales process will ensure the sales proceeds, far outweighing any fees involved.

A buyer will automatically assume a position of advantage if they see you have chosen not to take professional help, especially if they arm themselves with experts - beware.

Selling a business can be a complex and time consuming process, and it is very easy to underestimate. Using a broker means that you will benefit from an experienced professional who understands what it takes to make a deal happen – controlling the process from start to completion - ensuring no loose ends.

One of the best reasons to use a broker is to act as a buffer between you and the purchaser. There will certainly be times when you'll want to adopt a tough negotiating position. A broker makes this possible without antagonising the buyer. You might have to work with a new owner during a post sale handover.

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How do I choose a business broker?

Follow this link for specific further information on how to choose a business broker.

Alternatively click here to find out why you should use Lucas & Weston.

Here's an article on BFS.com outlining the different types of brokers and their fees.

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What information will I have to provide?

Initially, we would ask for your latest set of accounts and/or management accounts together with any business plan or company literature. We would then contact you, in confidence, to discuss your business's saleability and answer any questions you might have.

Any enquiry will be confidential and without obligation.

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Should my accountant sell the business for me?

The first steps of a business sale are neither legal nor accountancy based. A principle reason many sales never get off the ground. Selling a business is first and foremost a SALES and MARKETING exercise.

A business broker who excels at sales and marketing knows the marketplace and has experience of completing a wide range of transactions should be the first person you contact. A good broker can make a dramatic difference in not only how your business is sold but also how much you get.


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What kind of businesses do you sell?

We sell sole traders, partnerships, limited companies and public limited companies (PLCs) in most industrial, manufacturing, leisure and service sectors. However, we only seek instructions from profitable going concerns with a minimum adjusted net profit of £100,000 or more. We don't get involved in turnarounds or liquidations.

We are selective and cautious about the engagements we undertake. Our preference is to handle a smaller number of high-quality transactions.

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What size companies do you sell?

Businesses worth between £300,000 to £10million. Typically with a turnover from £500,000 to £10million.

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Do you offer advice to buyers?

As an independent company acting on behalf of our clients, we offer limited advice to purchasers. However, we are happy to point them in the right direction to banks and lawyers who might be able to assist them.

Click here for advice for buyers.

Our sister operation, www.westonacquisitions.com, offers services to buyers.

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Why would I use Lucas & Weston?

The reasons are many, but in short, over 40+ years of experience, a bespoke service, knowledgeable, professional staff and a proven track record of success. Click here for more on why you should use Lucas & Weston?

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Do I need a solicitor and accountant?

Once a deal is agreed, a solicitor's job is to draw up the definitive sale and purchase contract. It is vital that you work with a solicitor whose main field of expertise is corporate law - principally the buying and selling of businesses. Choosing the wrong solicitor can cost you time, and a lot of money and untold amounts of stress and can even put your deal in jeopardy.

A good accountant can assist with tax and preparation of financial information and analysis for the sale and subsequent due diligence following agreement of a deal.

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What is an executive summary or teaser document?

This is usually a short, one page, document which describes what your business is and the opportunity it represents. A broker will put this together, and it should give enough information to create interest while being anonymous and confidential.

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What is an NDA?

An NDA, or non-disclosure agreement (often referred to as a confidentiality agreement) is a document given to an interested party to sign before the release or disclosure of any information about your business or sale. An NDA authorises and restricts the use of information solely for the consideration of acquiring the business. It allows the flow of information to an acquirer and their advisers. NDAs are typically legally binding but can be very difficult to enforce.

We have a proven and very thorough vetting and NDA process to protect who sees your information and what information they can access.

No commercially sensitive information gets given to any party without strict adherence to our proven vetting and NDA process and only with your express authority. Simply put, you decide who has access to your information..

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What is an IM?

An IM or Information Memorandum is a working document provided to potential acquirers once vetted an NDA is signed. The IM describes the business and operations and often includes limited financial information. Care must be taken to get the balance right between disclosure of information and protecting sensitive details. It should not contain employee or customer names for example.

Typical information included is a brief history, industry background, current operations, property and locations, employee numbers/key staff, financial summary, SWOT analysis, current trading and opportunities for growth.

It is important to get this document right as it is one of the main selling tools used to elicit interest. Also, any information provided must be accurate and not lead to misdescription.

We employ graphic designers to produce professional IMs for our clients. IMs which get results. We are regularly complimented on them for example:

"The IM is very well produced and is informative and relevant to the proposition." Ralph Findlay - CEO Marston's PLC

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How do you keep my business sale confidential?

We go to great lengths to safeguard the confidentiality of our clients. We have a tried-and-tested process of maintaining confidentiality. We vet and pre-qualify all our purchasers making them sign confidentiality undertakings / non-disclosure agreements. No sensitive details of any business are ever given to potential purchasers without a client's consent.

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What is an MBO, MBO and BIMBO?

They are all types of acquisition. An MBO is an acronym for Management Buy Out, where an existing management team or employee in the business buys the business from the current owners.

An MBI (Management Buy In) is where an unrelated or outside manager or management team buys the business.

The third variant is the BIMBO or Buy In Management Buy Out. This is a hybrid of the MBO and MBI and where an outside party joins with the existing management of the business to buy the business.

With all the acronyms that fly around in the business sale or M&A world, we have produced a Simple Guide to M&A Terminology and Jargon covering over 185 deal terms, explained in plain English.

You can get an instant FREE copy here.

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How will I know what is going on?

Regularly updates keep you informed at every stage of the process. No details about your business are ever given out without your express permission. You control who we talk to and what we tell them. We are accountable to you at every step of the way.

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How do you find me a buyer?

With every new instruction, we do extensive and diligent background research to find who has the financial capability, appetite, and interest to acquire your business. Most of our clients are positively surprised with the levels of serious purchaser enquiry our sales process generates.

Around 50% of buyers are know to the seller and are from the same or allied industry/trade. The balance is made up of private investors, private equity or investment groups.

We have developed market leading, cutting-edge marketing initiatives which deliver results.

There is no other broker operating in the UK, who consistently delivers as comprehensive and inclusive marketing package as we do.

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How are meeting held and managed?

We organise viewing meetings, which are initially held off site, or in a neutral location. Our job is to look after your best interests, guiding you through every step of the sales process and making sure you get best value for your business.

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Who will handle the sale for me?

The main reasons for our continued success is that all our engagements are director led, not in title only, which insures that you have an experienced qualified professional assisting you at every step of the process. They are in control and fully accountable for every aspect of your sale.

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What are your fees?

Our success fee is contingent. This means we have the incentive to get you the best possible price. Unlike many brokers, we don't make money on excessive up-front fees. We don't have sneaky or hidden extras, and our fee structure is transparent and fully inclusive.

We agree our fees with you in writing at the outset so we can both concentrate on selling the business.

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I tried to sell before and nothing happened. Can you help?

This is a very common problem. The chances are there is a very good reason your business hasn't sold. Once we have identified and rectified this, we can help sell the business for you.

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I've been approached about selling. What should I do?

The first thing you should do is verify and vet the purchaser to see how serious the offer is. If it is serious, you're going to need some help. In the absence of a competitive bidding scenario, it is highly unlikely you would receive the best value.

You need to establish if the offer is acceptable or if the market place could deliver a better opportunity. We have an excellent track record of negotiating and benchmarking offers that makes deals happen. Give us a call, in total confidence, we'd be delighted to help.

Have a look at our negotiation only page as it might be suitable for you.

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What are the main reasons businesses don't sell?

Usually there are two principal reasons that businesses don't sell. One, the wrong price and two, not identifying and talking to enough serious buyers. It is possible to sell most businesses if these two issues are properly addressed.

An article of interest we wrote for the business pages of the BBC News website.

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How much time will I have to put into the process?

You will have to prepare some paperwork. If you are well organised, this shouldn't be a problem. We handle virtually all of the time-consuming or potentially intrusive elements of the selling process on your behalf. Client owners can continue to run the company without disruption or distraction. Our pre-qualification purchaser-screening process avoids tyre kickers, nosey competitors and time wasters. Once a deal is agreed you will have to spend some time working alongside your solicitor. Again the more organised you are in advance, the easier it is.

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What are 'heads of terms' or 'heads of agreement'?

Heads of Terms, often interchangeably referred to as Heads of Agreement, is a document which spells out the key terms of a deal agreed between relevant parties. Heads are usually put together following or during negotiation prior to initiation of the formal legal process.

The terms are typically non-binding except for confidentiality or exclusivity. The Heads of Terms are superseded by the SPA.

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What is due diligence?

The process where a purchaser will carry out a comprehensive appraisal of the business. Typically a due diligence process will cover commercial, legal, financial and other – such as tax, IT or intellectual property. It is the buyers chance to understand and explore exactly what they are buying.

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What is an SPA, and who does it?

An SPA is an acronym for Sales and Purchase Agreement. An SPA is a legal document which binds the buyer and seller to a transaction. The document states the terms of the sale and covers all the aspects of the deal.

For business sales, it is usually, but not always, the purchaser’s solicitor who will create the first draft of the agreement. You will review this closely with your solicitor as part of the legal process.

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What are Warranties?

Warranties are a part of the legal process for company sales. They are a statement made by the seller covering certain facts about the business the seller believes to be true. If any warranty is deemed not to be true, it could lead to a claim for breach of warranty and then open up a case for damages.

Warranties can often appear to look onerous. However, your solicitor will talk you through the process which should be straightforward.

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What is a disclosure letter?

An advanced part of the formal legal process. A Disclosure Letter is a key document in your company sale and is your formal and legal disclosure of any items you want to draw to the attention of the purchaser whether they have been addressed in due diligence or not. By making disclosures, the purchaser cannot then claim they were unaware of the issues and claim against any warranty.

Getting this document right is vital, and you’ll work alongside your solicitor to produce the letter. The buyer will usually agree that the seller will not be in breach of warranty where any issues have been disclosed in the letter.

This is for guidance only and is not intended as legal advice. Specialist advice an information should be sought by an experienced and qualified professional lawyer.

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How long is the legal process?

This depends very much on the complexity of the deal and the parties involved. A typical legal process for a limited company share transfer from start to completion is 12-15 weeks. That said, if there is will on both sides and it isn't too complex, a deal can be done much sooner. If a sales is an asset and goodwill disposal, the process can be quite quick.

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Do you help with all of this?

We run and manage the entire sale process up until signature of a heads of terms. Thereafter, we don't get specifically involved in the legal stages and due diligence as this is handed over to your solicitor to administer. However, we liaise and keep in touch with all parties to drive a deal through to conclusion.

We are on hand to offer guidance and advice throughout the process, not just the easy bit at the start.

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How do I get started?

Have your questions answered, or start the process NOW. Call us on 01225 460 777 from the UK (local rate charged). Callers from outside the UK please dial +44 (1225) 460 777.

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