The process of selling a business

My first two posts in this series outlined the various methods of valuing a business for sale, and the steps you can take to maximise the value of your business. This post describes the selling process, step by step. No two business sales are the same, as each will present different challenges. However, a typical transaction will involve the following.

  1. The business vendor decides to exit their business by selling it.
  2. The vendor puts together a business sale team consisting of a legal representative, an accountant, and a business broker appropriate to the nature of their business.
  3. The vendor arranges an initial appraisal meeting with the business broker and decides whether to embark on a period of business grooming, i.e. implementing improvements to the business’s performance and structure, or start the selling process straight away.
  4. Once the vendor and broker decide it is the right time to sell, a letter of engagement is signed to retain the business broker to market the business.
  5. The sale preparation process starts and the business vendor provides all necessary documentation relating to the company.
  6. The broker prepares a business valuation report to identify the bottom-line deal value, possible deal structures and appropriate asking price and marketing strategy.
  7. The broker prepares the marketing brochure (sales memorandum and full information package).
  8. The vendor signs off both the business valuation report and marketing brochure.
  9. The broker works with the vendor to make sure all supporting documentation is ready for buyer enquiries and due diligence.
  10. The broker proceeds with marketing the business.
  11. The broker manages all buyer responses and enquiries:
  • Buyers are qualified for their suitability.
  • Each buyer signs and returns a non-disclosure agreement (NDA) or confidentiality undertaking before receiving any detailed information.
  • The sales memorandum – an overview of the business structure, products and services and financial performance – is provided to the buyer.
  • Any buyer questions are directed to the business broker.
  • The broker arranges a meeting between the vendor and the buyer, either at the business premises or at a discreet location.
  • The full information pack (financial statements, asset lists, etc.) is provided to the buyer.
  • The business broker manages any further questions and meetings.
  1. The buyer submits an offer to the business broker.
  2. The broker reviews the offer with the vendor to decide the appropriate response.
  3. Further negotiation – mediated by the business broker – takes place as necessary, until an offer is accepted.
  4. The buyer’s and/or vendor’s legal advisors draft a heads of terms agreement, which both parties sign.
  5. The transaction process now begins, coordinated by the business broker.
  6. The buyer starts the due diligence process with their legal advisor and accountant.
  7. The business broker works with the vendor to ensure the timely provision of all necessary documentation to support the due diligence process.
  8. The business broker liaises with the legal advisors and accountants of both vendor and buyer to ensure that the deal process remains on track and that any issues are resolved.
  9. Once due diligence is completed, buyer’s and/or vendor’s legal advisors prepare the sale and purchase agreement, and both parties sign it.
  10. Contracts are exchanged and the deal is completed.

The business is sold! It’s now time to relax and enjoy the fruits of your hard work.

My next post will explain what, typically, you should include in the sales memorandum mentioned in items 7 and 11 above. In the meantime, for more information or advice on this topic, email me or call me on 020 7099 2621.

If you missed my previous posts on this topic, catch up here:

How to value your business for sale

How to maximise the value of your business


This information was correct to the best of my knowledge and belief at the time it was posted. It is, however, written as a general guide, and is not intended to apply to specific circumstances. The content should not, therefore, be regarded as constituting legal advice and should not be relied on as such. Accordingly, I recommend that specific professional advice be sought before any action is taken.