When and how to prepare for a business exit

The need to exit a business can arise for many reasons—retirement, ill health, personal circumstances, or even disputes. Often, these events are beyond the control of the business owner, which is why it’s so important to be prepared. Without a clear plan, an unplanned exit can disrupt operations, damage value, and create uncertainty for employees, customers, and other key stakeholders.

Whether you’re planning ahead or responding to a change in circumstances, having a well-thought-out, flexible exit strategy can help ensure a smooth transition and protect the business you’ve worked hard to build.

What is an exit strategy?

An exit strategy is a planned approach to transitioning ownership and control of a business. It outlines how an owner intends to leave the business, whether through sale, succession, or closure. A clear exit strategy ensures continuity, maximises value, and reduces the risks associated with sudden or unplanned exits. It also helps align expectations, facilitates smoother negotiations, and provides a framework for decision-making during times of change or uncertainty.

When should you start to prepare for a business exit?

It’s never too soon to start preparing. Governing documents, such as partnership agreements or company articles, should ideally include provisions to address common exit scenarios—valuation approaches, permitted transfers, restrictions, and continuity planning.

Regardless of what plans a company may have in place right now, we’d recommend directors and shareholders carry out an annual review of exit planning, as being proactive should any unforeseen event arise is far better than simply needing to be reactive.

How should you prepare for a business exit?

In preparing for a shareholder exit, there are some typical steps we’d recommend directors and shareholders consider:

1. Consider your exit objective and motivations

What do you want or need to achieve on an exit? Do you want a complete withdrawal from the business, or would you like to retain a small shareholding for a continued income stream or for sentimental reasons?

2. Know your worth

Make sure you have a fair market valuation for the business or your interest in it.

Consider whether any discount is necessary based on the nature of the ownership or control.

3. Review available exit strategies

Explore the options available to you. Perhaps you’re looking to sell the business to new, unconnected owners. Or maybe there’s a strong management team you’d like to bring in to continue the business, incentivising them at the same time. The business could be family-run, with the older generation looking to retire and pass it down. Or perhaps the business has run its course and winding it up is the preferred route.

Once you know which option you prefer, more advanced preparation can begin.

4. Structure the exit

Consider how you want to receive the proceeds due to you on exit. Cash is key, but you might want to manage this with cashflow requirements of the new owners, or you may wish to defer some of the tax payable by you on sale, to spread the total tax cost. Other consideration options might be available, such as preference shares or loan notes, to make the deal structure most attractive to all parties.

5. Evaluate the timing of exit

Where business asset disposal relief is available, you might want to consider crystallising your disposal gain in the 2025/26 tax year, to take advantage of the current 14% Capital Gains Tax rate available, before this increases to 18% in 2026/27. Timing your exit carefully could result in significant tax savings, especially if your business has appreciated substantially in value.

6. Seek professional advice on the exit implications

A business exit can be complex and there’s plenty of room for error, which can leave you with an unintended tax outcome. Developing a tax strategy early in the process can help ensure the deal structure meets your objectives in the most tax-efficient way.

Which is the best exit strategy?

There are a variety of approaches that can be taken depending on the circumstances. You may be looking to sell to external buyers, pass the business to family members, enable a management team to take over, or wind the business up entirely. Each option offers different levels of control, tax efficiency, and continuity.

For a detailed overview of common exit routes, read our blog on exit strategy options.

Preparing for a business exit is not just about planning for the inevitable—it’s about protecting the business, its value, and its people. Whether the exit is planned or unexpected, having a clear strategy in place ensures smoother transitions and better outcomes.

From structuring deals to managing tax implications, we’re here to support you every step of the way, we can help advise you on all of the above.

Please don’t hesitate to contact us today to discuss your own situation and find out how we can assist you.