Exit planning: the 12 to 24 months that decide what you are paid
months of planning before going to market
qualifying period behind most UK tax reliefs
weeks from heads of terms to completion
self-registered acquirers in our network
Establish a defensible view of what the business is worth today and what it could be worth after a focused improvement period. Agree the shareholder objective: full exit, partial exit, or growth capital. Take initial tax advice while there is still time to restructure share ownership, because most reliefs depend on holding periods rather than intentions.
Baseline valuation and EBITDA normalisation
Shareholder objectives agreed in writing
Initial tax and legal structuring review
Two or three value drivers selected for the period
Fix what buyers discount", body:
Work on the small number of issues that reliably reduce price: owner dependency, customer concentration, unpriced or uncontracted recurring work, weak management reporting and undocumented processes. This is the phase with the highest return per hour, because every risk removed now is a risk the buyer cannot price against you later.
Maintenance and service agreements renewed on transferable terms
Monthly management accounts produced within ten working days
Customer concentration reduced or contractually secured
Build the evidence pack", body:
Convert the improvements into evidence a buyer can verify. Assemble the data room, reconcile the management accounts to the statutory accounts, formalise the recurring revenue schedule, tidy contracts and employment paperwork, and prepare a forecast that ties to pipeline, win rates and delivery capacity rather than ambition.
Data room populated and indexed
Recurring revenue schedule with renewal rates
Three-year historic and two-year forward financial model
Compliance, accreditation and insurance evidence collected
Approach a curated buyer list in a controlled sequence rather than responding to whoever happens to call. Competitive tension is the single most reliable protection against a reduced offer during diligence, because a buyer who knows there is an alternative has less room to renegotiate.
Blind teaser and information memorandum
Buyer list segmented by strategic, private equity and platform fit
Managed offer deadline and comparison of terms, not just headline price
Heads of terms signed with an exclusivity period you can live with
From heads of terms to completion typically runs eight to sixteen weeks depending on the buyer, the funding structure and how clean the data room is. Plan for the handover period agreed in the sale and purchase agreement, and for any earn-out mechanics that keep you commercially involved after completion.
Financial, legal, commercial and insurance diligence
Sale and purchase agreement, disclosure letter and warranties
Completion accounts or locked-box mechanism agreed
Handover, earn-out and employee communication plan
Buyers pay a multiple of maintainable earnings, not of last year's profit. Strip out one-off costs, owner benefits and non-recurring projects, and document every add-back with supporting evidence. An add-back you cannot evidence is an add-back the buyer will remove.
Maintenance, inspection, monitoring and compliance-led repeat work is priced far more generously than project or install revenue. What matters is that the contracts are written, transferable on a change of control, and renewing at a rate you can prove.
If the customer relationships, pricing decisions and technical judgement sit with the owner, the buyer is acquiring a job rather than a business. A functioning second tier is usually worth more than another year of revenue growth.
Where a single customer represents more than fifteen to twenty percent of revenue, expect either a discount or a chunk of the price deferred into an earn-out. Broadening the base, or securing long contracts, removes the argument.
Monthly management accounts that reconcile to the statutory accounts, a clean CRM and reliable job-level margin data shorten diligence. Slow, contradictory data is the most common cause of a process losing momentum.
In building services, facilities management and specialist healthcare, third party accreditation is a price-setting credential. Lapsed certification found in diligence raises the question of what else has slipped.
A forecast is tested against your historic accuracy. If last year's plan was missed by thirty percent, this year's plan carries no weight. Build a forecast you can defend line by line against pipeline and capacity.
Share register, option arrangements, property leases, employment contracts, IP ownership and any outstanding disputes. None of these raise the price. All of them can delay or reduce it.
Business Asset Disposal Relief has a lifetime limit
Business Asset Disposal Relief, formerly Entrepreneurs' Relief, applies a reduced rate of Capital Gains Tax to qualifying disposals up to a lifetime limit of one million pounds of gains. Gains above that limit are taxed at the main Capital Gains Tax rates. The relieved rate has been legislated to increase in stages, so confirm the rate that applies to your expected completion date with your accountant before you commit to a timetable.
Qualifying conditions run on a two year clock
In broad terms you must have held at least five percent of the ordinary share capital and voting rights, been an officer or employee of the company, and the company must have been a trading company, for at least two years ending with the disposal. That two year qualifying period is the single strongest argument for starting exit planning early: a restructure done twelve months before a sale can fail the test that the same restructure passes at twenty-four months.
Share sale and asset sale are taxed very differently
Most owners want to sell shares, because the gain is taxed once in the shareholder's hands. Many buyers prefer to buy assets and the trade, which can leave a double tax charge for a corporate seller. Where the buyer insists on an asset purchase, the price needs to reflect the difference in net proceeds, not just the difference in headline value.
Earn-outs and deferred consideration need advance planning
Deferred and contingent consideration carries its own tax treatment, and the choice between cash, loan notes and shares in the acquirer materially changes when tax falls due. Agree the tax analysis before heads of terms rather than after, because the structure is far harder to change once it is written down.
Consider whether an alternative structure fits better
A sale to an Employee Ownership Trust, a management buyout or a partial sale to a private equity investor each carry a different tax and cash profile. These are not always better, but an owner who has only ever considered a trade sale is negotiating with one option.
Take advice from a qualified adviser
This page is general information, not tax advice. Rates, thresholds and qualifying conditions change with each Finance Act. Confirm your position with a chartered accountant or tax adviser, and use the HMRC and GOV.UK sources listed at the foot of this page as the primary reference.
Quality of earnings analysis, monthly trading history, working capital profile, revenue recognition, margin by contract and job, aged debtors and creditors, capital expenditure history and the evidence behind every add-back.
Customer concentration and churn, contract terms and change of control provisions, pipeline conversion, pricing history, competitive position and the transferability of key relationships.
Share capital and the register of members, articles, shareholder agreements, options, material contracts, property leases, litigation and disputes, intellectual property and data protection compliance.
Employment contracts, restrictive covenants, holiday and bonus accruals, pension obligations, key person dependency, subcontractor status and any employment tribunal history.
Accreditation and certification status, health and safety record, insurance history and claims, systems and asset registers, vehicle fleet, and evidence that statutory inspection obligations have been met.
Corporation tax, VAT and payroll compliance, employment status of subcontractors, historic reliefs claimed, and any open enquiries. Unresolved items usually end up in an indemnity rather than a price reduction, but they cost time either way.
What is exit planning?", answer:
Exit planning is the structured work an owner does in the twelve to twenty-four months before a sale so that the business is easy for a credible buyer to understand, diligence and pay a strong price for. It covers the valuation baseline, the value drivers worth improving, the tax and legal structure, the evidence pack a buyer will demand, and the design of the sale process itself.
How long does exit planning take?
Twelve to twenty-four months is the practical window for most owner-led businesses. Twelve months is enough to tidy reporting, formalise recurring revenue and prepare a data room. Twenty-four months is needed where share ownership has to be restructured for tax purposes, where a management layer has to be recruited, or where customer concentration has to be reduced. The sale process itself typically adds a further six to nine months from first approach to completion.
How is exit planning different from exit readiness?
Exit readiness is the diagnostic: where does the business stand today against what buyers price. Exit planning is the programme of work that follows, with a timeline, owners for each action and a target date for going to market. Most owners start with the exit readiness hub, then move into planning once they have decided when they want to sell.
When should I start exit planning?
As soon as a sale is a realistic intention within three years, and immediately if you have already been approached by a buyer. The tax reliefs that matter most run on two year qualifying periods, and the operational improvements that move a multiple take at least two or three reporting cycles to become credible in the numbers.
What is Business Asset Disposal Relief and will I qualify?
Business Asset Disposal Relief applies a reduced rate of Capital Gains Tax to qualifying business disposals, up to a lifetime limit of one million pounds of gains. Broadly, you need to have held at least five percent of the ordinary share capital and voting rights, to have been an officer or employee, and for the company to have been trading, throughout the two years ending with the disposal. The relieved rate has been legislated to rise in stages, so confirm the applicable rate and conditions with your accountant and against the HMRC guidance linked below.
Should I sell shares or sell the trade and assets?
Most sellers prefer a share sale because the gain is taxed once in the shareholder's hands and the liabilities transfer with the company. Buyers often prefer an asset purchase because it leaves historic liabilities behind. Where a buyer insists on an asset deal, the headline price has to compensate for the difference in net proceeds after tax, which is a calculation to run before heads of terms rather than after.
What do buyers look at first in diligence?
Quality of earnings and the durability of revenue. A buyer wants to know which part of your EBITDA will still be there in three years without you in the building. Everything else, from contracts to accreditation to employment paperwork, is a check on whether that number is real and transferable.
How much does an earn-out usually represent?
It varies with the risk the buyer is pricing. Where earnings are contracted, diversified and management-run, deals are more likely to be weighted to cash at completion. Where the owner is central to the customer relationships or one customer dominates the revenue, buyers push more of the consideration into deferred or performance-linked payments. Reducing those two risks in advance is the most direct way to change the shape of the offer.
Do I need my accounts audited before a sale?
An audit is not usually required for a company below the statutory thresholds, and most buyers will commission their own quality of earnings work regardless. What matters far more is that your monthly management accounts are timely, consistent and reconcile to the filed statutory accounts. Unreconciled figures cost more credibility than the absence of an audit.
How do I keep a sale confidential?
Run a controlled process. Approach a curated list rather than advertising, use a blind teaser that describes the business without identifying it, take non-disclosure agreements before releasing an information memorandum, and stage the release of sensitive material such as named customer data until a buyer has demonstrated intent and funding.
What is a data room and what goes in it?
A data room is the indexed, access-controlled repository of everything a buyer will diligence: statutory and management accounts, tax filings, the recurring revenue schedule, material customer and supplier contracts, employment documentation, property leases, insurance history, accreditation certificates, asset registers and the financial model. Building it in advance is the difference between a process that keeps momentum and one that drifts.
What are the most common exit planning mistakes?
Starting too late to qualify for the tax position you assumed. Negotiating with a single buyer who approached you directly. Presenting add-backs you cannot evidence. Letting the business plateau during the sale process because the owner's attention has moved. And agreeing heads of terms with an exclusivity period long enough for the buyer to renegotiate at leisure.
How does DealFlowAgent run exit planning?
In three phases. Valuation establishes the baseline and the realistic range. Optimisation targets the small number of value drivers that move the multiple in your sector. Process runs a curated, competitive approach to strategic acquirers, private equity platforms and buy-and-build operators drawn from a base of 14,000 or more self-registered acquirers. Every stage is confidential and led by people, with technology used to shorten the research rather than to replace judgement.
GOV.UK: Business Asset Disposal Relief
Qualifying conditions, the lifetime limit and how to claim.
HMRC: Capital Gains Manual (CG64000+)
HMRC's technical guidance on Business Asset Disposal Relief.
GOV.UK: Capital Gains Tax rates and allowances
Current main rates and the annual exempt amount.
GOV.UK: Tax when your limited company gives to charity or sells assets
Corporate disposal treatment relevant to asset sales.
Alternative exit route and its qualifying conditions.
HMRC: Employment Related Securities Manual
Treatment of management shares, options and earn-out securities.
Filed accounts and ownership records buyers check before making contact.
GOV.UK: TUPE, transfers of undertakings
Employee transfer obligations on an asset or trade sale.
HSE: Health and Safety Executive
Duty holder obligations that buyers diligence in building services and facilities management.
The regime shaping compliance-led demand in fire, building services and inspection businesses.
How UK owners plan an exit over 12 to 24 months: timeline, value drivers, Business Asset Disposal Relief, buyer diligence and running a competitive sale process.
Exit planning is the twelve to twenty-four month programme that prepares a business, its shareholders and its paperwork for sale. It has four parts: establish a defensible valuation baseline, improve the small number of value drivers buyers actually price, settle the tax and legal structure early enough to qualify for the reliefs you are counting on, and run a competitive process rather than negotiating with the first buyer who calls. Owners who start late usually still sell. They just sell with less leverage.
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Most owners meet the market once. The buyer opposite has done it twenty times and arrives with a template agreement and a standard set of reasons the price should fall after heads of terms. Exit planning closes that gap before the conversation starts.
Four strands run in parallel. Get them in order and the process is yours to control.
Financial", body: "Maintainable earnings, evidenced add-backs, reporting a buyer can verify.
Operational", body: "Remove owner dependency, concentration and uncontracted revenue.
Structural", body: "Share ownership, tax reliefs and legal housekeeping, settled early.
Commercial", body: "Buyer list, positioning and how the business goes to market.
The timeline below is the sequence we use with owner-led businesses in building services, facilities management and specialist healthcare. Where a shareholding restructure is needed for tax purposes, work backwards from twenty-four months rather than twelve.
Every buyer is pricing risk. These are the eight areas where the risk is visible, measurable and worth money. Two or three improved properly beat all eight improved superficially.
Tax is the part of exit planning where late action is genuinely irreversible. Reliefs depend on qualifying periods measured in years, and a structure put in place three months before completion will often fail a test the same structure would have passed had it been done two years earlier.
This section is general information about UK tax as it applies to business disposals. It is not tax advice and it does not create an adviser relationship. Rates, thresholds and qualifying conditions change. Verify your position with a qualified accountant or tax adviser and against the HMRC and GOV.UK sources listed at the foot of this page.
Diligence usually runs eight to sixteen weeks from heads of terms. The purpose of exit planning is to make sure nothing surfaces in that window that you could have dealt with a year earlier at a fraction of the cost.
Valuation sets the baseline. Optimisation targets the two or three drivers that move your multiple. Process takes the business to a curated buyer list so competitive tension protects the price. Research is systematic. Judgement, approaches and negotiation are human.
Buyer landscape and EBITDA multiple bands differ by sector. Start with the page closest to your business, then plan around the drivers that matter there.
Joe Lewin, founder of DealFlowAgent, explains how the firm helps owners of building services, facilities management and healthcare businesses run a confidential, competitive sale process with 14,000+ vetted acquirers.
Pricing, relationships and know-how walk out of the door with you. Buyers price that risk into their offer.
Time, materials and margin slip quietly on live jobs, and by the time the accounts show it, the money is gone.
Financial reports, KPIs and pipeline figures arrive late because someone has to pull them together by hand.
Project work and ad-hoc jobs make cash flow hard to predict and cap the multiple a buyer will pay.