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2026 Business Sale & Exit Strategies for the SME Business Owner

The no‑nonsense UK playbook from Exits.co.uk

Trusted brokers & advisers to business owners

£500k–£5m turnover

​​1) Who this guide is for

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Private UK business owners turning over £500,000–£5 million, who have put in years of graft and are now within three years of selling. If that’s you, this is the flagship, straight‑talking guide you wished you’d had on day one.

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We’ve written it with owners in mind: not corporate financiers or lawyers. It’s practical, opinionated and built around how deals actually close in the UK mid‑micro and lower‑SME market.

2) The blunt truth about selling in 2026

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  • You’ll only do this once. Get it wrong and you can’t replay it.
     

  • There are no “Rightmove” comparables. Business value is not a Zoopla estimate. Your outcome is driven by preparation, process, team quality, buyer selection and the broader credit/tax environment not a folklore multiple your mate heard at the golf club.
     

  • Macro matters, but it isn’t everything. Funding costs influence appetite and structure. As we write, the Bank of England base rate sits around 4% (September 2025), materially higher than the 2010s norm, that shapes what buyers can borrow and how much they’ll defer. Money.co.uk+1
     

  • Tax changed. Business Asset Disposal Relief (BADR) no longer means an automatic 10% top slice. HMRC’s capital gains manual now sets 14% for qualifying disposals from 6 April 2025 to 5 April 2026, rising to 18% on or after 6 April 2026 (anti‑forestalling included). Timing and structuring matter. GOV.UK
     

  • DIY is false economy. Experience and grey hairs on your adviser team will save your deal more than once.
     

If you do nothing else after reading this section: start planning now and choose your team with care.

3) Exit planning: the single most valuable project you’ve never run

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Exit planning isn’t box‑ticking; it’s value engineering. Owners who prepare well bank more cash up‑front, accept fewer draconian terms, and complete faster. Here’s how to run it properly.

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3.1 Owner readiness (the personal side)

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  • Why are you selling? Retirement, de‑risking, growth capital via a partial exit, health, boredom? Be honest — buyers will test consistency.
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  • What’s your red line? Minimum cash at completion, acceptable earn‑out exposure, your role post‑sale (full exit vs 6–12 months consultancy), and cultural legacy.
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  • Life after sale. Line up a regulated financial adviser early to map cashflow, risk and tax wrappers once the money lands. (More on advisers later.)

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3.2 Business readiness (the operational side)

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  • Replace yourself. If you are the product, you will be asked to sell on a promise (earn‑out, paper and personal leg‑irons). Build a second layer that actually runs the P&L.
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  • Quality of earnings. Normalise EBITDA: remove one‑offs, stop personal spend through the business, fix pricing leaks, document margin by product/customer, and reduce dependency on one client, one supplier, one person.
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  • Data discipline. Monthly management accounts on proper deadlines, reconciled cash, debtor ageing under control, forward order book, cohort and retention metrics where relevant. Buyers pay more when they trust the numbers.
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  • Contracts and IP. Paper your reality: signed customer and supplier contracts; check assignment/novations; protect IP (trademarks, code repositories, domain ownership).
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  • Working capital. Stabilise stock and debtor days; get ahead of seasonality. Completion mechanisms hinge on this.

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3.3 Buyer readiness (the market side)

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  • Positioning. Define what you really sell (pain solved, segment, proposition, moat). Map your role in the buyer’s strategy — synergy beats size.
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  • Evidence. Case studies, net revenue retention, gross margin trend, unit economics. Create the materials pack: 1‑pager, NDA, Teaser, Information Memorandum (IM), data room index.

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Bottom line: Exit planning is not optional. It is the highest ROI project you’ll run between now and completion.

4) Valuation: a negotiating anchor, not the destination

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Valuation is not a fact. It’s a range that moves with competition, risk and structure.

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4.1 What actually drives price at your size

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  • Maintainable EBITDA (or SDE for owner‑managed trades).
     

  • Quality of earnings (recurrence, concentration, volatility).
     

  • Growth durability (pipeline > forecast, not the other way round).
     

  • Strategic fit (cross‑sell, route‑to‑market, supply chain savings).
     

  • Execution risk (key‑person, systems, regulatory, customer stickiness).

 

4.2 Multiples are a starting point

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  • Micro‑comps are unreliable. Private UK deals at £500k–£5m turnover rarely publish terms. Ignore “pub multiples”.
     

  • Real competition moves the needle. Two or three motivated strategic bidders will expand the range more than any spreadsheet will.

 

4.3 Price vs terms

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A high headline with a thin cash component, heavy earn‑out and buyer debt is not a better deal than a lower price with clean cash, limited warranties and sensible restrictive covenants. Know which you prefer before exclusivity.

5) Business brokers: the good, the bad and the ugly

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A first‑rate broker is a force multiplier. A poor one will waste a year, leak your intent to the market, and leave you wishing you’d never signed.

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5.1 What “good” looks like
 

  • Research‑led origination. They build a longlist of named strategic acquirers and approach them discreetly. They don’t rely on generic listing sites.
     

  • Sell‑side process design. NDA discipline, staged disclosure, buyer calibration, timetable control, competitive tension.
     

  • Storycraft + evidence. A strong IM anchored in data, not puff.
     

  • Term‑sheet realism. They anticipate buyer pushes (earn‑out split, working capital peg, warranty scope) and stage‑manage counter‑moves.
     

  • Alignment. Sensible success fee, minimal upfront, transparent engagement letter, clear termination rights.

 

5.2 Red flags (walk away)
 

  • Upfront fee addiction and suspiciously low success fee.
     

  • “We’ll pop you on the website.” If the plan is to list and wait for the phone, you’re the product not the client.
     

  • No references, no track record in your turnover band.
     

  • Valuation theatre. Inflated promises to win the mandate.
     

  • Leaky process. No NDAs, sloppy buyer screening, no data room hygiene.

 

 

Honest take: A successful deal at this level is rarely DIY. The experience and grey hairs of a seasoned advisor team will make all the difference.

6) Strategic vs financial buyers: choose your counterparty wisely

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Not all buyers are created equal. Who you pick shapes price, terms, and your life for the next three years.

 

6.1 Strategic (trade) buyers : why they often win for owners

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  • They can pay for synergies. Cross‑selling, overhead savings, procurement advantages.
     

  • They usually bring cash. Corporate balance sheets and banking lines are deeper and cheaper.
     

  • They understand your sector. Less time educating, fewer execution surprises.
     

  • Cleaner structures. More cash up‑front, shorter tails, realistic covenants, clearer handovers.
     

6.2 Financial buyers: proceed with caution

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This bucket includes individual investors, search funds and small funds. There are excellent exceptions, but in the sub‑£5m turnover zone too many offers are debt‑heavy, deferred and contingent on your future effort. Typical features:
 

  • Minimal equity, maximum leverage. Your consideration hinges on bank behaviour you don’t control.
     

  • Earn‑out dependence. Payment becomes a promise tied to targets you may not control.
     

  • Sector inexperience. Hand‑holding for years, with you doing much of the heavy lifting.
     

  • Rollover ask. You’re asked to reinvest in a vehicle you didn’t choose.
     

 

Blunt but fair: If a buyer has no relevant sector track record and no committed equity, you’re not “selling”, you’re financing their apprenticeship. For most owners, that’s the wrong risk/reward.

7) Routes to market: research‑led outreach beats passive listings

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If your turnover is £500,000+, waiting for the phone to ring is not a strategy. Listing sites exist to gather generic leads. They are not where serious buyers find defensible, well‑run SMEs with momentum.

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7.1 What a proper route to market looks like

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  1. Market mapping. Build a longlist of 100–300 named strategic acquirers across adjacencies and supply chain nodes.
     

  2. Prioritisation. Shortlist by fit, synergy logic, funding capacity and acquisition history.
     

  3. Calibrated outreach. Senior‑to‑senior contact with a tight teaser under NDA.
     

  4. Phased disclosure. IM, Q&A, management meetings, focused diligence.
     

  5. Competitive tension. Parallel heads where possible; avoid unearned exclusivity.
     

  6. Tight timetables & hygiene. Weekly drumbeat, disciplined data room, decision logs.
     

7.2 Why this matters

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The right buyer isn’t always obvious or in your sightline, often they are not even directly in your sector. You don’t “find” them or they fond you on a listing page; you create them through research and a well‑run process.

8) Deal structure & terms: where value is won (or lost)

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The cheque size is only part of the story. Structure determines risk, tax and sleep quality.

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8.1 Share sale vs asset sale (UK‑centric)

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  • Share sale (most common): cleaner for continuity — contracts, licences, employees and IP remain in the company; you sell the shares.
     

  • Asset sale: buyer cherry‑picks assets and leaves behind liabilities; often pushes TUPE transfers and novations. Tax and legal outcomes differ.
     

8.2 Completion mechanics
 

  • Working capital: expect a peg aligned to a “normal” level for seasonality. Miss this and you can give price back post‑completion.
     

  • Completion accounts vs locked box:
     

    • Completion accounts: price finalised after completion; more reconciliation work.

    • Locked box: economic risk passes at a historical balance‑sheet date; requires clean numbers and leakage protections.
       

8.3 Earn‑outs and deferred consideration

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  • Keep earn‑outs short, simple, and within your control. Define metrics precisely, set accounting policies in the SPA, and tie operational levers to your authority.
     

  • Require security for deferred sums (escrow, guarantees, charge over shares).
     

  • Beware “too clever” targets that can be gamed by the new owner.
     

8.4 Warranties, indemnities & W&I insurance

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  • Expect business‑wide warranties, with caps, baskets and survival periods.
     

  • W&I insurance can reduce personal exposure in the right deals, but policy exclusions track your disclosure, so the data room and disclosure letter must be watertight.

9) Legal & people: it’s not like selling your house

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A business sale isn’t a property conveyance. There are no universal comparables and employee rights engage. Get specialist counsel.

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9.1 Heads of terms (HoTs)

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  • Non‑binding on price/structure, but binding on exclusivity, confidentiality and break fees (if any). Keep exclusivity short and milestone‑based.
     

9.2 People and TUPE

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On a business transfer (asset deal) or certain service provision changes, employees may be protected by TUPE. That means automatic transfer on existing terms, strict information and consultation duties, and limits on dismissals linked to the transfer. Get advice early, mishandling TUPE creates disputes, costs and delay. GOV.UK
 

9.3 Contracts, licences, property

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  • Change‑of‑control clauses: identify and plan consent tracks.
     

  • Leases: check assignment and landlord consent.
     

  • Licences/accreditations: some can’t move easily, plan renewals.
     

  • Data & GDPR: buyers will test compliance (DPIAs, lawful bases, processor terms).

10) Tax & succession: BADR, EOTs and what changed for 2025–26

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Caution: This section is general information, not advice. Speak to a qualified tax adviser before acting.

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10.1 BADR (formerly Entrepreneurs’ Relief): the 2026 reality
 

  • Qualifying disposals still benefit from reduced CGT relative to main rates.
     

  • HMRC’s manual now confirms 14% BADR rate for gains realised between 6 April 2025 and 5 April 2026, and 18% from 6 April 2026 onwards, with anti‑forestalling rules for unconditional contracts designed to block rate‑locking. Your timing and contract mechanics matter. 
     

  • Eligibility still hinges on conditions (qualifying business assets/shares; usually a 2‑year qualifying period) and the lifetime cap remains a key limiter, validate your position against HMRC’s helpsheet when planning. 
     

10.2 Employee Ownership Trusts (EOTs): still 0% CGT if you qualify, but with new guardrails

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  • A sale of a controlling stake to a qualifying EOT can still deliver 0% CGT for sellers, subject to strict conditions. 
     

  • From 30 October 2024, the regime was tightened: trustee residency, consideration must not exceed market value, curbs on former owners’ control, and longer vendor clawback windows. Get specialist input and clearance strategies right. 
     

  • EOT‑controlled companies can pay employees tax‑free bonuses up to £3,600 per person per tax year (NICs still apply) if scheme rules are met.
     

 

When is an EOT sensible? Strong cash generation, stable margins, a leadership team that can operate without you, and a genuine cultural commitment to employee ownership. When not? If proceeds depend on aggressive future trading or you need a clean, quick exit at maximum upfront cash.

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10.3 Other tax angles to weigh

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  • Pre‑sale dividends vs price: cash extraction can be efficient in some cases; model both routes carefully.
     

  • Rollover/retirement wrappers: use a regulated wealth planner to structure proceeds (ISA/SIPP/VCT/EIS where relevant to your risk appetite and tax position).
     

  • Asset vs share sale: VAT, SDLT, capital allowances and goodwill can bite, structure early with your accountant.

11) Your adviser bench: who does what, and when

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A successful deal is rarely a solo act. Build a bench with real SME M&A experience.

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11.1 Business broker / corporate finance adviser (sell‑side)
 

  • Designs and runs the process; crafts the IM; originates and qualifies buyers; manages competitive tension; negotiates HoTs and shepherds diligence.
     

  • A good broker pays for themselves in price uplift, cleaner terms, and time saved.
     

11.2 Exit & succession adviser / consultant / mentor
Pre‑sale operational clean‑up: organisation design, KPI cadence, pricing, margin, and management bandwidth.
 

  • Useful when owner‑dependence is high or the business needs a 6–12 month tune‑up.
     

11.3 Solicitor (M&A specialist, not a generalist)
 

  • Heads, SPA, disclosure, warranties, indemnities, restrictive covenants, TUPE and all the paper that keeps your money yours.

  • Choose a firm that closes owner‑managed deals weekly, not one that “can have a look”.
     

11.4 Accountant / tax adviser (sell‑side)
 

  • Quality of Earnings (QoE), normalisations, working capital analysis, and tax structuring.
     

  • The right accountant turns “we think EBITDA is £X” into “here’s the evidence”.
     

11.5 Independent financial adviser (post‑sale)
 

  • You’ve just converted sweat into cash. Now protect, allocate and put it to work across risk‑appropriate wrappers and instruments.
     

  • Engage early; cash‑flow modelling shapes your walk‑away number and negotiation posture.

12) 36‑month readiness roadmap (practical and realistic)

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Months 0–6: Baseline & control
 

  • Hire your core team (broker conversation, M&A solicitor short‑list, accountant for QoE scoping).
     

  • Owner‑dependence audit and succession fixes.
     

  • Management accounts: monthly, on time, reconciled.
     

  • Remove personal spend from the P&L.
     

  • Start pipeline and retention tracking; clean CRM.
     

Months 7–12: Package & pilot
 

  • Draft Teaser + IM; build data room index (corporate, financial, tax, commercial, HR, property, IP, IT).
     

  • Dry‑run due diligence: test your data room against a buyer’s checklist.
     

  • Identify your buyer universe and synergy theses.
     

Months 13–18: Soft market test
 

  • Quietly sound out a handful of A‑list strategics under NDA to calibrate hooks and likely deal shape.
     

  • Tighten your working capital cadence; lock in supply and key staff.
     

Months 19–24: Launch
 

  • Launch a formal, brokered process with a disciplined timetable.
     

  • Controlled management presentations; track Q&A ruthlessly.
     

  • Shortlist and push to competing heads.
     

Months 25–30: Exclusivity & diligence
 

  • Grant short exclusivity against clear milestones.
     

  • QoE, legal, commercial, tech diligence; negotiate SPA, warranties, peg and any earn‑out.
     

Months 31–36: Completion & handover
 

  • Sign & complete (or sign with split completion if conditions).
     

  • Execute handover plan; trigger deferred mechanics; start your post‑deal life with a regulated wealth plan.

13) Business Sale: exit readiness checklist

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Financial & data

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  • ☐ Monthly P&L, balance sheet, cashflow (last 36 months).

  • ☐ Bank recs current; debtor/creditor ageing clean.

  • ☐ EBITDA normalisations listed with evidence.

  • ☐ Revenue by product, channel, customer; gross margin by line.

  • ☐ Forward order book/pipeline quality documented.

  • ☐ Working capital trend and “normal” level calculated.

 

Commercial

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  • ☐ Top 20 customers analysed (tenure, margin, change‑of‑control).

  • ☐ Supplier dependencies mapped and mitigated.

  • ☐ Pricing policy documented; discounting under control.

  • ☐ Marketing & sales engine described with conversion metrics.

 

People

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  • ☐ Organisation chart with successors named.

  • ☐ Contracts, handbooks and policies up to date.

  • ☐ Incentives/retention plan ready for key staff.

  • ☐ TUPE exposure understood for an asset sale. GOV.UK

 

Legal & IP

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  • ☐ Cap table, shareholder agreements, options (EMI, etc.).

  • ☐ Trademarks, patents, domains, code repositories owned by the company.

  • ☐ Leases, licences and change‑of‑control clauses logged.

  • ☐ Litigation and compliance registers clean.

 

Tax

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  • ☐ BADR eligibility reviewed; timing modelled against 2025–26 rates. GOV.UK

  • ☐ EOT feasibility (if relevant) assessed under the new rules. GOV.UK

  • ☐ Pre‑sale extraction options modelled; personal plan aligned.

 

Process

  • ☐ Broker engaged (research‑led, references checked).

  • ☐ Buyer universe mapped; outreach plan agreed.

  • ☐ Teaser/IM/NDA/data room complete.

  • ☐ Timetable and decision log established.

​14) FAQs (the straight answers about a successful business sale)

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Q1. Is selling a business anything like selling a house?


No. There are no reliable public comparables. Outcomes depend on preparation, a research‑led competitive process, buyer selection and terms, not a standardised multiple.

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Q2. My turnover is just over £500k. Should I list on a business‑for‑sale site?


If you want a lottery, list and wait. If you want a proper exit, run a research‑based outbound to named strategic acquirers. For serious buyers at this size, passive listings under‑perform.

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Q3. Why do strategic buyers usually beat financial buyers for SMEs?

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Because they can pay for synergies, bring real cash, and understand your sector. Financial buyers in this band often rely on borrowed money and earn‑outs, pushing risk onto you.

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Q4. Aren’t earn‑outs normal?


They’re common. Keep them short, measurable and within your control. Ensure the SPA nails definitions, accounting policies and operational levers. Use security where you can.

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Q5. What changed on UK tax that I should care about in 2025–26?

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  • BADR rate: 14% (2025/26) then 18% (2026/27 onwards) on qualifying gains, with anti‑forestalling on contracts. GOV.UK

  • EOTs: 0% CGT remains for qualifying disposals but with stricter rules on trustee residency, market value and former‑owner control; plan carefully.

  • TUPE: unchanged fundamentals, protect employees properly in business transfers.
     

Q6. How early should I start preparing to sell my business?


12–36 months is ideal. You can sell faster, but you’ll negotiate from a weaker position.

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Q7. Do I really need a broker?


If you want to maximise price, improve terms and protect confidentiality, yes. At this size, a specialist, proactive broker is not a luxury, it’s the difference between a tidy exit and a saga.

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Q8. Should I consider an EOT?


Maybe. If you want continuity, value culture, and can fund consideration out of future profits, an EOT can be excellent and tax‑efficient. If you want maximum cash at completion, or your profit profile is volatile, a strategic sale is often better. 

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Q9. How does the interest‑rate backdrop affect my sale?


Higher rates tighten debt capacity and can increase the share of deferred or earn‑out in offers, especially from financial buyers. Strategics with cash are less constrained. 

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Q10. What’s the one mistake owners regret most?


Signing exclusivity too early, before you’ve built competitive tension and pinned down the real levers (cash at completion, peg, earn‑out mechanics, warranty caps).

15) About Exits.co.uk & next steps

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Exits.co.uk is one of the leading and most trusted UK SME business brokers, acting for private owners turning over £500k–£5m. We run discreet, research‑led sale processes that surface serious strategic acquirers, create tension, and deliver clean, bankable outcomes.

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If you’re within three years of selling:

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  1. Confidential chat. We’ll listen, stress‑test your goals and assess sale readiness.
     

  2. Readiness review. A structured diagnostic across financials, commercial, legal and people.
     

  3. Go‑to‑market plan. Buyer universe mapped. Process and timetable agreed. Materials built.
     

  4. Proactive outreach. Senior‑to‑senior engagement with genuine strategics.
     

  5. Negotiation & diligence. We run the track so you keep running the business.
     

 

No‑fluff promise: We won’t inflate valuations to win mandates. We’ll tell you what the market will pay, how to move the needle, and we’ll put our fee behind outcomes.

The Final word

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Selling an SME is not selling a house. There’s no shelf price, only a range and where you land in that range is determined by preparation, the quality of your process, the calibre of your team, and the buyer you choose.

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If your business turns over £500k–£5m and you’re inside three years of exit, you need a proactive, research‑led broker, not a listing service. Exits.co.uk runs that process discreetly, professionally and without the fluff.

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Ready to talk? Start with a confidential, no‑nonsense conversation. We’ll tell you what the market will pay, how to move it in your favour, and what it will take to get you a clean, bankable outcome,  first time, no regrets.

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Notes & caveats: This article is information, not advice. Laws, rates and guidance change. Always engage a regulated financial adviser,  a qualified tax adviser, and an experienced business broker.

Appendices (for business owners who like details)

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A) Heads of Terms: what to lock down

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  • Price and structure (cash/deferred/earn‑out).

  • Working capital mechanism and definitions.

  • Key employment terms for your ongoing role (if any).

  • Exclusivity scope and duration, information undertakings.

  • Non‑compete / non‑solicit parameters.

  • Milestones to completion, including access to diligence.
     

B) Data room: an SME‑friendly index

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Corporate & secretarial: Companies House filings, cap table, SHAs, option grants (EMI, CSOP), registers.
 

Financial: 36 months management accounts; 3 years statutory accounts and CT returns; bank statements; aged AR/AP; capex register; debt/facility docs; forecasts and assumptions.
 

Tax: VAT/PAYE filings, HMRC correspondence, R&D claims history.
 

Commercial: Top 50 customers/suppliers, MSAs, SoWs, pricing, rebates, SLAs, renewals, pipeline.
 

HR: Contracts, handbooks, benefits, disputes, IR35 assessments, settlement agreements.
 

Property: Leases, licences to assign, service charges.


IP & IT: Trademarks, patents, domains, licences, code ownership, cybersecurity policies.


ESG & compliance: Policies, audits, certifications (ISO, Cyber Essentials), incident logs.
 

C) Strategic vs financial buyer: fast comparison
 

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Strategic Buyer vs Financial Buyer - Fast Comparison.png
Strategic Buyer vs Financial Buyer - Fast Comparison.png
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