Tips for preparing your business for sale

Steve Halkett, corporate partner in the Business Services group at Lodders, shares his advice for business owners considering a future sale.

Serial entrepreneurs aside, most business owners will only go through one sale in their lifetime – and selling your business can be a complex and sometimes emotional process with much to consider. But, with the right preparation and by taking a critical look at your business, you can navigate it smoothly and maximise the value you can extract. 

A key part of preparing for a sale is understanding the assets, people and processes that will add the most value in a sale and, conversely, identifying any potential ‘skeletons in the closet’ that are best dealt with well in advance of the sale negotiations. It is advisable to take a step back and look at your business through the eyes of a potential buyer: what would they see that would either motivate or concern them? After all, it’s always easier to fix problems before the sale process begins than deal with them during negotiations.  

Business sale: key considerations

There are a number of considerations to make when preparing to sell your business. These include:

1. Contracts: The value of a business often lies in its contracts with its customers and suppliers. All industries are different but ideally make sure all important contracts are in writing, properly drafted, contain the correct provisions, been signed, and actually exist! Long-term contracts with long notice periods and the ability to pass on costs or implement price rises can add significant value. If you are currently operating on handshakes and goodwill, now is the time to start formalising your important relationships.
2. Employees: If the value of your business is tied to its employees, consider implementing incentive schemes like EMI (Enterprise Management Incentive) schemes. Aligning key employees with the company’s success can help ensure they stay motivated during the sale process and beyond. In addition, having long notice periods and restrictive covenants, stops key employees leaving with little time to replace them and also prevents them from approaching and potentially stealing important clients, suppliers and employees.
3. Intellectual property: Ensure that your business owns or has the ongoing legal right to use all its IP assets, such as copyright, licences, software, code, know how, trademarks and patents. Also, keep a detailed log of all open-source code used (if any) and adhere to the terms of its use. If these rights are not protected and secure or you have incorrectly used open-source code, the value of your business could be significantly reduced.
4. Location and premises: If the location of your business is crucial to its ongoing success, ensure you have secure tenure on your property, whether through ownership or a long lease, and that there are no unfavourable terms for a potential buyer.
5. Change of control clauses: Review your commercial contracts for change of control clauses that could allow suppliers or customers to terminate agreements if your company’s ownership changes. Address these clauses early to avoid complications during the sale process.
6. Financial obligations: Check for any bank facilities, grants, or debt that may become repayable upon sale. Ensure these obligations are managed well in advance.
7. Pensions: Be sure to check all employee pension paperwork is in order and compliant and contributions are up to date.

Specialist legal support

Selling a business can be an emotional experience, especially if you’ve built it over many years and have long-term loyal relationships with employees, suppliers and customers. At Lodders, we have extensive experience in guiding business owners through the sale process. We recognise that for many business owners, this may be their first (and only) business sale. Crucially, we understand the importance of discretion whilst also working to maximise the value of your business. With a corporate team of three partners and five associates, we are big enough to deliver, but small enough to care. 

Integrated wider legal support

Lodders specialises in representing individuals, whether in a private client capacity or in relation to their owner-managed businesses. This unique focus allows us to assist business owners at every stage of their journey. With top-tier and highly respected private client, family, and business services teams, we provide comprehensive support throughout the entire lifecycle of business ownership:

• Estate planning: Wills, trusts, and Family Investment Companies (FICs);
• Asset protection: Trusts, pre-nuptial and post-nuptial agreements; and
• Business growth, acquisitions, and sales: Investments, commercial and IP contracts, employment advice, reorganisations, and sales and acquisitions.

Get in touch

Steve Halkett is a partner in Lodders’ Business Services group and specialises in corporate and restructuring work, including business sales. For specialist support with preparing your business for sale, contact Steve here.

This article first appeared in the Summer 2025 issue of Birmingham Business magazine.