How a Trade Sale Works: The Process from First Approach to Completion

A trade sale. Selling your business to another company, often a competitor, supplier, or consolidator in your sector. Is the most common exit route for UK owner-managers. The full process, from first engaging an adviser to receiving funds on completion, typically takes 12 to 18 months. It can be done faster, and it frequently takes longer. What follows is an honest account of how it actually works, where the time goes, and where deals fall over.

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What should you do before you even approach an adviser?

The 12 to 18 months before you formally engage anyone are not dead time. They are the period when you do the work that determines your eventual price.

At a minimum, this preparation phase should include:

  1. Cleaning up your accounts. Three years of audited or reviewed accounts with clear EBITDA, add-backs documented, and director remuneration normalised. Buyers and their accountants will look hard at this.
  2. Reducing owner dependency. If the business cannot function without you for a month, buyers will discount heavily or structure most of the price as an earn-out.
  3. Securing key contracts and staff. Customer concentration matters. If 40% of your revenue comes from one client, deal with it before sale. Key management should be on proper employment contracts with reasonable notice periods.
  4. Sorting out the company structure. If there are non-trading assets in the business, dormant subsidiaries, or property held within the trading company, take advice on whether to extract or restructure before sale.
  5. Understanding your tax position. Business Asset Disposal Relief (BADR) reduces Capital Gains Tax to 10% on qualifying gains up to a lifetime limit of £1 million (as of April 2026). If you are likely to exceed that threshold, additional planning may be appropriate. This article contains general information only and does not constitute financial or tax advice. Every business sale is different. Speak to a qualified UK tax adviser about your specific situation before making any decisions.

What does an adviser actually do in a trade sale?

A corporate finance adviser. Sometimes called a sell-side adviser or M&A adviser. Runs the process on your behalf. They are not estate agents. They are not brokers listing your business on a marketplace. Their job is to manage a competitive process that generates multiple offers, create tension between buyers, and negotiate terms before you are ever in a room with legal teams.

They will prepare your marketing documents, maintain a buyer list, manage the flow of information under NDA, co-ordinate management presentations, and guide you through offer evaluation and exclusivity. A good adviser earns their fee by getting you a better price and better terms than you would achieve alone, and by keeping the deal alive when it hits problems. Which it will.

What is an Information Memorandum?

The Information Memorandum (IM) is the main marketing document for your business. It is typically 30 to 60 pages and covers the business model, financial history, management team, customers, market position, and growth opportunities. It is written to attract serious buyers whilst being accurate enough to withstand scrutiny during due diligence.

A shorter teaser document. Often two to four pages, anonymised. Goes out first to gauge interest before any NDA is signed. Only once a buyer signs a non-disclosure agreement do they receive the full IM.

How do you approach potential buyers?

There are broadly two approaches, and your adviser should explain the trade-offs clearly.

ApproachDescriptionBest suited to
Structured processIM sent to a wide longlist (20–50+ buyers). Competitive tension. Multiple indicative offers.Businesses with broad appeal, strong financials, multiple potential buyer types
Targeted approachThree to eight buyers approached selectively. More confidential. Less disruptive.Where seller has strong views on who the right buyer is, or where confidentiality is critical
HybridInitial targeted approach, widening if insufficient interest.Most common in UK mid-market

Buyer types in a trade sale typically include: direct competitors, businesses in adjacent sectors seeking to expand, international companies entering the UK market, and consolidators (often PE-backed) rolling up businesses in your sector.

What happens after a buyer shows interest?

Once an interested buyer has signed an NDA and received the IM, the process moves through several stages:

  1. Management presentation. You and your senior team present the business in person or via video call. This is your opportunity to sell the vision. Not just the numbers. Buyers are assessing you as much as the business.
  2. Q&A and follow-up information. Buyers will have questions. Your adviser manages this carefully to avoid giving one buyer an informational advantage over others.
  3. Indicative offers (or letters of intent). Buyers submit non-binding offers, usually specifying an indicative price range, deal structure, and any key conditions. This is the point where you compare terms across multiple bidders.
  4. Shortlisting. You and your adviser select one or two preferred buyers to progress to the next stage. Price matters here, but so does deal structure, cultural fit, and credibility of the buyer.

What is exclusivity and when does it start?

Exclusivity is the period. Typically four to eight weeks, sometimes longer. During which you agree not to negotiate with other buyers whilst one party completes due diligence and finalises the deal. It is usually granted after you have agreed Heads of Terms (HoTs).

Heads of Terms set out the key commercial points: price, structure (shares or assets), deferred consideration, earn-out arrangements if applicable, treatment of working capital, and any conditions of the deal. They are not legally binding on the main transaction, but exclusivity and confidentiality provisions within them usually are.

Granting exclusivity is a significant step. You are handing leverage to the buyer. Your adviser should push for as short an exclusivity period as possible, with clear milestones.

What does due diligence actually involve?

Due diligence is the buyer's systematic investigation of your business before they commit to the price. It is conducted by their lawyers, accountants, and sometimes sector specialists. It covers:

  • Financial DD. Three to five years of management accounts, tax returns, working capital analysis, debt and cash positions
  • Legal DD. Contracts with customers and suppliers, employment arrangements, IP ownership, property leases, disputes or litigation
  • Commercial DD. Customer relationships, market position, competitive dynamics (sometimes done via third-party consultants)
  • Tax DD. HMRC compliance, any outstanding enquiries, PAYE and VAT records

You will need to populate a virtual data room (VDR) with hundreds of documents. This is where preparation pays off. Disorganised or incomplete records slow due diligence and give buyers grounds to chip the price.

What is the SPA and what gets negotiated?

The Share Purchase Agreement (SPA) is the main legal contract. It is drafted by the buyer's solicitors and then negotiated. Key areas of negotiation include:

  • Warranties. Statements about the business you are making as fact. If they turn out to be untrue, the buyer can claim against you.
  • Disclosure. You can limit warranty liability by disclosing known issues against specific warranties in a disclosure letter.
  • Warranty and Indemnity (W&I) insurance. Increasingly common in UK mid-market deals. Shifts warranty liability to an insurer, giving sellers a cleaner exit.
  • Completion accounts vs locked box. How the final price is calculated and adjusted.
  • Deferred consideration and earn-outs. If part of the price is contingent on future performance.

SPA negotiation can take four to eight weeks and is where deals frequently become strained. Stay close to your adviser and solicitor throughout.

What goes wrong and where do deals fall over?

Most deals that fail do so for one of five reasons:

  1. Price chip after due diligence. Buyers find something they claim reduces value. Sometimes legitimate. Sometimes tactical.
  2. Vendor discovers undisclosed issues in their own business. Problems you did not know existed become expensive.
  3. Key man risk surfaces. The buyer gets nervous that the business is too dependent on the seller.
  4. Financing falls through on the buyer's side. More common where the buyer is PE-backed and reliant on debt.
  5. Heads of Terms were too vague. Ambiguity about earn-out mechanics, working capital targets, or deferred consideration creates late-stage disputes.

Realistic trade sale timeline

StageTypical duration
Preparation (pre-adviser engagement)12–18 months
Adviser engagement to IM completion6–10 weeks
Buyer outreach and indicative offers8–12 weeks
Management presentations and shortlisting3–5 weeks
Heads of Terms negotiation2–4 weeks
Due diligence and SPA negotiation10–16 weeks
Completion1–2 weeks
Total (adviser engagement to completion)9–18 months

FAQ

What EBITDA multiples can I expect in a UK trade sale? It varies significantly by sector and scale. As a rough guide: manufacturing and logistics businesses typically sell at 4–7x EBITDA; healthcare and pharmaceutical services 6–10x; professional services at SME scale 4–6x; facilities management and construction 3–6x. These are indicative ranges. Quality of earnings, growth profile, and market conditions all move the dial.

Do I need an adviser, or can I run the process myself? You can, and some sellers do. But without an adviser, you are likely to see fewer buyers, have less negotiating leverage, and have no one managing the process whilst you continue to run the business. The fee is typically a success-based percentage of deal value, which aligns incentives.

What is the difference between a share sale and an asset sale? In a share sale, the buyer acquires the company itself. All assets, liabilities, and history. In an asset sale, the buyer acquires specific assets and contracts. Most sellers prefer a share sale for tax reasons; many buyers prefer an asset sale to avoid inheriting unknown liabilities. This is a key negotiation point.

How confidential is the process? NDAs are signed before detailed information is shared, but in a process with 20+ potential buyers, leaks can happen. A targeted process with fewer buyers is more confidential. Your adviser should help you manage what is disclosed and when.

What happens to my staff during a trade sale? TUPE (Transfer of Undertakings Protection of Employment) regulations apply if the business is sold via an asset sale. In a share sale, employees remain employed by the same legal entity and TUPE does not technically apply. Though the buyer will still scrutinise employment contracts, key man arrangements, and any potential liabilities.

When do I actually receive the money? A portion of the price. Often 70–90%. Is paid on completion. The rest may be deferred over one to three years or structured as an earn-out tied to future performance. W&I insurance can reduce the amount held in escrow against warranty claims.

Find out what your business could be worth

Before you begin any formal process, it helps to understand the rough value range you are working with. Use the free valuation calculator on the Succession Group website to get an indicative view based on your sector, revenue, and EBITDA. With no obligation and no adviser conversation required at this stage.