How to plan ahead when selling a business

Insight shared by:

Gateley Legal

Article by

When the time comes to sell a business and move it onto its next phase, forward planning is everything. This can take a large amount of management time and effort from start to completion, so making sure a successful conclusion is reached all comes down to how the process is approached at the outset.

Considering an effective and successful exit strategy in advance provides the seller with the opportunity to make changes and ensure a business is as attractive as possible to prospective buyers. Initially this can appear to be daunting for many business owners, who may be unsure of how or when to start to get ready for selling and moving their business on to new owners.

We explore some of the common issues and best practices when preparing to sell, while also offering some important insight into the latest trends the sector is currently experiencing.

Due diligence

Exit strategies are certainly not a short-term consideration. They need good strategy and planning to ensure a business is in a fit and ready state for sale. This can be carried out during a due diligence process in a ‘pre-sale review’. This can be thought of as a health check-up or MOT for a business to ensure there are no issues or concerns that might affect its value, the sale timetable or get in the way of the final execution of a deal. This would involve closely examining how a business is performing and what actions can be taken to remedy any potential concerns.

Making changes

When preparing a business for sale, the pre-sale review may identify the need for new policies and procedures. This is where forward planning comes into play as you need time to introduce and embed new practices, while demonstrating they are working effectively and achieving the desired result. Of course, not all problems have a workable solution, therefore it is important to prepare to explain and deal with any known issues within a business during the negotiation stage.

The ‘vendor report’ is the next step after the pre-sale review. This is the document a potential buyer will need to rely on to provide everything they need to know about their possible acquisition. This is usually brought about when there are several potential buyers involved in the process.

Common issues

Some of the most common failings within a company relate to requirements such as:

  • data protection/ GDPR compliance;
  • lack of documented health and safety policies;
  • taxation filing inaccuracies;
  • lease guarantees; and
  • dilapidations.


Due diligence ahead of the sale of a business is not in any way a new process, but over time it has evolved and adapted to meet the requirements of both sellers and buyers. Today’s market has seen a desire for ever quicker diligence processes and an increased use of technology. There is also an increased focus on environmental, social and governance compliance and more general governance positions, to demonstrate a positive and ethical business philosophy to the outside world and potential buyers.

Ensuring due diligence is carried out will enable any ‘red flags’ which could cause concern to buyers and place the seller on the back foot to be quickly identified. Buyers will always seek opportunities and find reasons to create leverage so they can try and negotiate a better price, so making sure everything is as it should be will quite literally pay dividends for sellers.

For those thinking about selling their business, starting with the right level of support and advice for planning and preparation is vital. Key to this is bringing in experts with the knowledge and experience from the outset to enable a smooth transition from seller to buyer and a successful outcome all round.

Gateley Plc is authorised and regulated by the SRA (Solicitors' Regulation Authority). Please visit the SRA website for details of the professional conduct rules which Gateley Legal must comply with.

Got a question? Get in touch.