How to Prepare Your Business for Sale 18 Months Out: A Practical UK Guide
Eighteen months is the right amount of runway. It's enough time to fix what's genuinely fixable, build a credible narrative, and reach the market in a position of strength rather than necessity. Most owners who sell well started preparing earlier than they thought they needed to. Those who struggle typically started six months before going to market — and spent half that time firefighting. What follows is a practical, phase-by-phase guide to using the 18-month window properly.
Table of Contents
- Why 18 months — and not 6 or 24?
- Phase 1 (Months 18–12): Strategic and structural work
- Phase 2 (Months 12–6): Commercial and financial work
- Phase 3 (Months 6–0): Process and positioning
- What does a buyer actually look for?
- Related reading
- FAQ
Why 18 months — and not 6 or 24?
Six months is not enough time to materially change how a buyer reads your business. You can tidy the edges, but you cannot change a structural story. Twenty-four months, on the other hand, risks losing momentum — the market shifts, your appetite changes, and the preparation effort gets diluted.
Eighteen months hits the sweet spot. It gives you two full sets of management accounts to show improvement in. It gives you time to restructure contracts, resolve legacy issues, and build a management team story that holds up under scrutiny. Critically, it gives your advisers enough time to help you present your business as it actually is — rather than as it might have been under different circumstances.
Phase 1 (Months 18–12): Strategic and structural work
This is the foundation phase. The changes you make here take longest to evidence, which is exactly why you make them first.
Reduce owner dependency
This is the single biggest value driver in an owner-managed business — and the single most common red flag in due diligence. If the business cannot function credibly without you for three months, a buyer will price that risk into their offer. Start delegating meaningful responsibility now. Document processes. Ensure key client relationships have management-level contact, not just yours.
Strengthen or build the management team
A strong management team — one that will stay post-completion — adds directly to your valuation multiple. Consider whether any critical hires are needed. If you promote someone into a new role, give them 12 months to demonstrate performance before you go to market. A newly-promoted FD or MD with six weeks in post carries no evidential weight.
Review your corporate structure
Speak with a tax adviser about your group or holding company structure before going to market. Common issues to address include:
- Share classes that need tidying (particularly if you have multiple share classes for different family members or legacy reasons)
- Consideration of holdover relief if assets are being restructured
- Whether to move IP or property out of the trading company before sale
- Confirming eligibility for Business Asset Disposal Relief (BADR) — currently providing a 14% CGT rate on the first £1m of qualifying gains (as of April 2026)
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.
Identify and fix EBITDA normalisation issues
Buyers will adjust your reported EBITDA. The question is whether they do it in your favour or against you. Common normalisation items include owner salary above or below market rate, personal expenses run through the business (car, travel, insurance), one-off costs or revenues, and related-party transactions at non-arm's length rates. Identify all of these now. Some you will adjust in the Information Memorandum; others you will simply stop before they appear in future accounts.
Resolve legal and contractual loose ends
Commission a basic legal review. Common issues: shareholders' agreements that haven't been updated in years, undefined IP ownership, employment contracts for senior staff that don't reflect their current roles, leases with break clauses or expiry dates that will concern a buyer, and any outstanding disputes or tribunal claims.
Phase 2 (Months 12–6): Commercial and financial work
By month 12, the structural work is either done or in progress. Now the focus shifts to what a buyer will see when they read your numbers and your contracts.
Extend key customer contracts
A buyer will look at your revenue concentration and contract duration. If your top three customers represent 60% of revenue and their contracts expire in 18 months, that is a risk — and it will affect your multiple. Identify which contracts need extending and start those conversations now. Aim for minimum two-year terms on material relationships.
Clean up supplier agreements
Review your key supplier contracts for change-of-control clauses. These are common and often overlooked — some contracts allow a supplier to terminate or renegotiate upon a sale of the business. Identify them early. Where you can renegotiate or waive those clauses in advance, do so.
Strengthen recurring revenue
Recurring or contracted revenue is valued more highly than project or transactional revenue in every sector. If there are opportunities to introduce retainer arrangements, service contracts, or subscription-based pricing in your model, this phase is the time to implement them. Even moving 10–15% of revenue from transactional to contracted can have a meaningful impact on your multiple.
Clean the balance sheet
This is often overlooked until due diligence, by which point it causes delays and embarrassment. Key items:
- Director's loan account: If you have a significant overdrawn DLA, clear it or create a plan to do so before completion
- Related-party transactions: Ensure any loans or transactions between connected parties are documented and on arm's-length terms
- Surplus assets: Decide whether personal-use assets (vehicles, property) should be extracted before sale
- Aged debtors: Chase outstanding invoices. An inflated debtor book at completion creates working capital disputes
Commission a financial health-check
An independent financial review — sometimes called a vendor due diligence lite or an accountant's report — will identify what a buyer's investigating accountant will find. Better to know now than at Heads of Terms stage.
Phase 3 (Months 6–0): Process and positioning
The final phase is about execution. The heavy lifting is done. Now it is about presenting the business effectively and running a clean process.
The 6-step process for the final phase
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Select your advisers: You will need a corporate finance adviser or M&A broker and a specialist M&A solicitor. Take time to interview several. The adviser running your deal will have a significant impact on outcome.
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Commission vendor due diligence (VDD) if appropriate: For businesses over £5m EBITDA, a formal VDD report from an independent accountant adds credibility and accelerates buyer diligence. Below that level, a well-prepared data room can serve the same purpose.
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Prepare the Information Memorandum (IM): This is your primary sales document. It should cover business overview, financial history (typically three years), management team, market position, and growth narrative. Your corporate finance adviser will typically lead on this, but you need to be closely involved.
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Brief your management team: Decide who needs to know, when, and what they're told. Most owners tell the senior team at or just before the process begins. Retention bonuses and lock-in arrangements should be considered at this stage.
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Prepare your data room: Organise all key documents — accounts, contracts, employment records, IP registrations, property documents, Companies House filings — into a structured virtual data room ready for buyer access.
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Time your market entry relative to the tax year: There can be meaningful advantages to completing before or after 5 April depending on your personal tax position. Plan your timeline with your tax adviser.
What does a buyer actually look for?
Understanding the buyer's lens makes the preparation more purposeful.
| Factor | What a buyer wants to see | Impact on multiple |
|---|---|---|
| Management team | Capable, retained, independent of owner | High |
| Revenue quality | Contracted, recurring, diversified | High |
| EBITDA trend | Growing, clean, well-documented | High |
| Customer concentration | No single customer >20–25% of revenue | Medium–High |
| Legal and HR hygiene | No outstanding disputes, clean contracts | Medium |
| Balance sheet | No DLA issues, realistic working capital | Medium |
| IP and systems | Owned by the company, documented | Medium |
Typical EBITDA multiples in the UK mid-market (businesses with £1m–£5m EBITDA) currently range from 4x to 8x depending on sector, recurring revenue quality, and growth trajectory. Professional services and healthcare services tend to trade at the higher end; construction and logistics somewhat lower, reflecting contract risk and capital intensity.
Related reading
If you found this guide useful, you may also want to work through the Exit Preparation Checklist: 18 Months to Sale, which gives you a printable task-by-task checklist to run alongside this guide. For a deeper look at your financials, see How to Clean Up Your Financials Before a Business Sale.
FAQ
How long does a typical UK business sale take from going to market to completion? For an owner-managed business in the £2m–£20m revenue range, expect six to nine months from first approaching buyers to completion. Complex deals or those with property, earn-outs, or TUPE issues can run longer.
Do I need to tell my staff I'm selling the business? No — and in most cases you should not do so until the deal is near exchange. Premature disclosure creates uncertainty and retention risk. TUPE regulations protect employees' terms on a business transfer, but the timing of communication should be agreed with your solicitor.
What is BADR and do I qualify? Business Asset Disposal Relief (formerly Entrepreneurs' Relief) reduces CGT to 14% on qualifying gains up to £1m. To qualify, you generally need to have owned at least 5% of shares and voting rights and been an employee or officer for at least two years before the sale. Speak to a tax adviser to confirm your eligibility.
What is a director's loan account and why does it matter in a sale? A director's loan account (DLA) records money borrowed from or lent to the company by a director. An overdrawn DLA — where you owe the company money — must typically be repaid before or at completion, which affects your net proceeds. Buyers will scrutinise it during due diligence.
Should I use a broker or a corporate finance adviser? The distinction matters. A business broker typically works on lower-value transactions and charges a success fee against a buyer list. A corporate finance adviser takes a more structured approach — preparing the IM, running a competitive process, and managing the negotiation. For businesses above £2m EBITDA, the latter generally produces better outcomes.
What if I'm not ready to sell in 18 months — is the preparation wasted? No. Almost everything in this guide improves the business regardless of sale outcome. A stronger management team, cleaner contracts, better recurring revenue, and a clean balance sheet make the business more resilient and more profitable while you continue to run it.
Use the Succession Group valuation calculator
Before you begin your preparation, it helps to understand where your business is likely to be valued today — and what realistic improvements in EBITDA or revenue quality could do to that number. Use the free valuation calculator on the Succession Group website to get an indicative range based on your sector, revenue, and EBITDA. It takes less than five minutes and gives you a useful starting point for your planning.