For many owner-managers, the business is their biggest asset and their main source of retirement funds.
How and when you step away will shape what you walk away with, so planning well ahead is essential.
Most successful exits are planned over several years rather than months and this is where some owners misstep.
Allowing two to five years gives you time to strengthen the business and to check that you meet the conditions for valuable tax reliefs.
It also lets you choose your moment, rather than having it forced on you by ill health or an unexpected offer, which may not see you achieve full value for your business.
It is also worth deciding whether you want a clean break or are happy to stay on as a consultant for a period, as this will influence which exit route suits you.
The main options are a sale to a third party, a management buyout (MBO), a sale to an employee ownership trust (EOT) or passing the business to the next generation.
A trade sale to a competitor or investor often achieves the highest price, but you should expect rigorous due diligence. For this reason, there is a growing trend towards sellers due diligence and audits pre-sale to show buyers that the business is sound and fairly valued.
Part of the consideration may be deferred or tied to future performance through an earn-out. No two business sales are the same and each one depends on the circumstances of each party and the business.
For example, an MBO keeps the business in familiar hands, although the team will usually need external funding and you may be asked to accept some of the price in instalments.
Meanwhile, EOTs remain a popular succession route, but since 26 November 2025 the capital gains tax (CGT) relief on qualifying disposals to an EOT has been cut from 100 per cent to 50 per cent so the figures need careful modelling.
For disposals on or after 6 April 2026, Business Asset Disposal Relief (BADR) taxes qualifying gains at 18 per cent, compared with the 24 per cent higher rate of CGT for higher rate taxpayers.
The relief is subject to a £1 million lifetime limit, so the maximum saving is now £60,000. CGT is set at UK level, so these rates apply in Scotland just as they do elsewhere.
To qualify on a share sale, you generally need to have held at least 5 per cent of the ordinary shares and voting rights for two years, and to have been an officer or employee throughout that period.
The company must also be a trading company. Large cash balances or investment property held within the business can put trading status at risk, so these should be reviewed well before a sale.
BADR must be claimed through your Self Assessment return. For a disposal in the 2026/27 tax year, the deadline is 31 January 2029.
Gifting shares to your children is treated as a disposal at market value for CGT purposes, even though no money changes hands.
Gift holdover relief can usually defer the gain, with the recipient taking on your original base cost.
Inheritance tax (IHT) is the other key consideration. From 6 April 2026, 100 per cent Business Property Relief is limited to the first £2.5 million of combined qualifying business and agricultural property, with 50 per cent relief above that. This gives an effective IHT rate of 20 per cent on the excess.
Lifetime gifts generally fall outside your estate if you survive seven years, but a gift made within that window can count against the allowance.
It is also worth remembering that a sale turns a business which may qualify for IHT relief into cash that does not. CGT and IHT should, therefore, always be considered together.
Buyers pay for profits they believe will continue after you leave, so reducing reliance on you personally is key.
Developing a capable second tier of management and documenting key processes can make a real difference.
Recurring revenue and a broad customer base both reduce risk in the eyes of a buyer.
Equally, heavy reliance on one or two major customers can lead to a lower offer or a larger earn-out.
Reliable financial information matters too, as up-to-date management accounts and realistic forecasts give buyers confidence and support a stronger valuation.
Legal housekeeping, from leases to customer contracts, should also be tidied up before pre-sale investigation or due diligence begins.
Every exit is different, and the right approach depends on your personal circumstances as much as on the business itself.
Speaking to Scholes early gives you the best chance of protecting the value you have built and leaving on your own terms. To discuss your plans, get in touch with our team.
