Planning for Exit: a guide to preparing your business for sale

Alistair Aird, Corporate Finance Director, Carpenter Box

For many owner-managers, selling a business marks the culmination of years of hard work and is often a once-in-a-lifetime event. Too often, however, exit planning is left until a sale is imminent, rather than approached as a deliberate, long-term process. In reality, the strongest outcomes are achieved by businesses prepared well in advance. Exit planning is not simply about finding a buyer; it is about ensuring the business can withstand scrutiny, achieve a strong valuation and give the owner real choice over timing and structure.

Whether an exit is planned in two years or ten, early preparation can significantly improve value and certainty.

Start with the end in mind

The first step in exit planning is clarity of objectives. Owner-managers should consider what a successful exit looks like for them personally. Is the priority maximum price, certainty of completion, a clean break or a phased transition? Different buyers – from trade and private equity to management teams – value businesses in different ways, and early clarity helps shape preparation.

Timing is equally important. Markets fluctuate, personal circumstances change, and unforeseen events can accelerate or delay an exit. Sale-ready businesses are more resilient and better placed to act when conditions are favourable.

Build a business that works without you

One of the most common value destroyers in owner-managed businesses is over-reliance on the founder or another key individual. Buyers will discount value where revenue, relationships, skills or decision-making sit disproportionately with one person, particularly if they cannot be easily replaced.

Preparing for sale therefore requires a shift from owner-dependence to management-led operations. This includes building a capable second tier of management, formalising decision-making processes and documenting key procedures. The business should be seen as an organisation in its own right, not an extension of the owner.

From a buyer’s perspective, a business that can demonstrate continuity after completion is lower risk and therefore more valuable.

Get your financial house in order

Financial information sits at the heart of any transaction. Buyers will undertake detailed financial, tax and legal due diligence, often covering three years or more. Well before a sale process begins, accounts should be robust, consistent and transparent.

This includes addressing adjustments and ad-hoc arrangements commonly found in owner-managed businesses, such as personal expenses through the company, non-commercial remuneration, irregular transactions or family members on the payroll. While these may be legitimate, they can complicate negotiations and undermine confidence if not clearly explained.

Businesses must also be able to evidence maintainable earnings. Buyers focus less on historic profit and more on maintainable EBITDA as a proxy for cash-generating ability. Clear management accounts, budgets and forecasts demonstrate control and credibility.

Strengthen commercial fundamentals

Beyond the numbers, buyers will scrutinise the quality of earnings. Customer or supplier concentration, short-term contracts and informal arrangements can all raise concerns.

Key commercial relationships, including employment contracts for key staff, should be reviewed well in advance of sale. Where possible, contracts should be formalised, durations extended and pricing mechanisms clarified. Reducing dependency on a small number of customers or suppliers can significantly de-risk the business.

Intellectual property should also be clearly owned by the company, not individuals. This is particularly important for technology, branding and proprietary processes. Any ambiguity can delay or derail a transaction.

Address tax and structure early

Tax planning is most effective when undertaken early. Reliefs such as Business Asset Disposal Relief are subject to conditions that must be met over time, and late planning can result in unnecessary tax leakage.

The corporate structure should also be reviewed. Group arrangements, property ownership, shareholder loans and surplus assets may all affect valuation and deal structure. In some cases, pre-sale reorganisation can simplify the business and improve buyer appeal, but this requires time and careful implementation.

Prepare for due diligence before it starts

A smooth sale process is one where few surprises emerge during due diligence. Owner-managers can improve deal certainty by undertaking a vendor readiness exercise in advance, reviewing the business as a buyer would, identifying potential red flags and resolving issues proactively.

This reduces execution risk and strengthens the seller’s negotiating position. Buyers are typically more confident and competitive when information is clear and risks are already understood, with mitigation in place where required.

Assemble the right support team

Exit planning should not be undertaken in isolation. Experienced advisers can help identify value drivers, assess readiness and map a realistic route to exit. Importantly, advisers should be engaged well before a transaction is launched, allowing time for genuine value creation rather than reactive problem-solving. A coordinated approach between corporate finance, tax and legal advisers can make a significant difference to both outcome and experience.

Summary

Selling a business is rarely a quick event; it is the outcome of years of preparation. Owner-managers who treat exit planning as part of their wider business strategy are far more likely to achieve a successful outcome on their own terms. Early focus on management depth, financial robustness, commercial resilience and tax efficiency builds stronger, more attractive businesses.

If you would like advice on preparing your business for sale or wider business strategy, please contact our Corporate Finance team on 01903 234094 or visit www.carpenterbox.com