By Tom Simpson
22 Sep 2026
Last updated: 15.09.2026
If you are thinking about selling your business, the headline price is only part of the story. The structure determines what you actually receive, when you receive it, how much depends on future performance, and how much you keep after tax. Two offers with the same headline number can be worth very different amounts.
UK buyers are more selective than they were five years ago and negotiate structure harder. Knowing what is negotiable is one of the best ways to protect value.
This article covers:
Deal values rose sharply in the first half of 2026. Total UK deal value reached around $237 billion, more than double the preceding six months, while volumes fell 22% to 1,303 transactions.
Activity is increasingly concentrated in the lower mid-market. More than one in three UK private equity exits in H1 2026 were in the £25 million to £100 million range, their highest share on record, and the median UK strategic deal value in Q2 2026 was £16.3 million.
For an owner-managed business, this means buyers are selective. They will pay a premium for the assets they want, and reprice or walk away from anything that does not stand up to diligence.
An M&A deal is a transaction in which two businesses combine: one company buying another (an acquisition), two companies coming together (a merger), or a business acquiring selected assets. Almost every UK private company transaction is an acquisition rather than a true merger.
There is no single template. The structure determines what the buyer acquires, which liabilities transfer, when consideration is paid and the tax position on both sides.
Share sale – The buyer acquires the shares and with them the whole business, including its liabilities. The most common structure for UK private company sales and generally the seller’s preference: a clean break, and it can qualify for Business Asset Disposal Relief (BADR). It can be a full exit or a partial sale.
Asset sale – The buyer takes selected assets and agreed liabilities, leaving the selling company behind, often as a shell that is later liquidated. Contracts need novating and employees transfer under TUPE. Buyers can leave unwanted liabilities behind; sellers usually resist, largely for the tax reasons below.
Management buy-out or buy-in – The existing or an incoming team acquires the business with private equity or debt support. A useful succession route where continuity matters.
Employee Ownership Trust – A sale to a trust held for employees, with a favourable tax treatment. The conditions have been tightened in recent years and the trust funds the price out of future profits.
Growth capital or minority investment – New money into the business through the issue of new shares, to fund growth rather than to cash out shareholders. Existing shareholders may take some value off the table alongside it.
The terms below determine what a seller actually receives, and when. They are agreed in principle in the heads of terms, the largely non-binding document that sets out the shape of the deal. Anything conceded at that stage is difficult to recover later.
The consideration mix – Cash at completion, deferred cash, loan notes, shares in the buyer or an earn-out. The mix matters as much as the total: cash at completion is certain, everything else carries risk and is taxed differently.
Enterprise and equity value – Enterprise value is the value of the trading business, usually a multiple of adjusted EBITDA. Equity value is what the shares are worth after adding cash, deducting debt and adjusting working capital against a normalised benchmark. Both the multiple and the adjustments are negotiated.
Completion accounts or locked box – The two mechanisms for fixing the final price. Under completion accounts, the price is set by reference to the balance sheet at the date of completion, which is prepared and agreed afterwards. Under a locked box, the price is fixed against an earlier balance sheet, with the economics of the business passing to the buyer from that date and leakage restricted in the meantime.
Deferred consideration, earn-outs and rollover equity – Parts of the price paid later, made contingent on performance, or reinvested into the acquiring group. The drafting matters: how performance is measured, who controls the business during an earn-out, and what protection you have once you are no longer in charge.
Warranties, indemnities and disclosure – Statements about the business given by you and qualified by the disclosure letter. Exposure is usually capped and time-limited, often backed by W&I insurance, sometimes with part of the price held in escrow.
Restrictive covenants – Limits on you competing with, or recruiting from, the business sold. These need to work for whatever you plan to do next.
Tax rarely drives a deal, but it determines what you keep. Address it before heads of terms are signed, not after.
A share sale is taxed as a capital gain in the shareholders’ hands. An asset sale is taxed in the company, with a second charge on extraction. Often the largest single tax variable in a deal.
BADR gives a reduced rate of Capital Gains Tax on the first £1 million of qualifying gains per individual, measured over a lifetime. That rate rose from 10% to 14% for 2025/26 disposals and to 18% from 6 April 2026. Gains above the £1 million limit are taxed at 24% for higher and additional rate taxpayers, so on most business sales the majority of the proceeds are taxed at 24%. The conditions, including a 5% shareholding and being an officer or employee for two years, need reviewing well ahead of a sale.
Where consideration includes shares or loan notes in the buyer, it may be possible to defer the gain on that element rather than pay tax on value not yet received in cash. The conditions are specific and HMRC clearance is usually worth obtaining in advance.
A qualifying disposal to an EOT can be free of Capital Gains Tax entirely. The conditions were tightened by recent legislation, so planning based on the older rules needs revisiting.
Payable at 0.5% on share transfers. The buyer’s cost, but part of the overall deal economics.
From 6 April 2026, 100% BPR and Agricultural Property Relief (AGR) are subject to a combined allowance, with qualifying value above it relieved at 50%, giving an effective 20% charge on the excess. The allowance is transferable between spouses. Unlimited relief has gone, so planning ahead of an exit matters more than it did.
We set out the detail in our guide to the new inheritance tax rules for business owners.
Tax rules change frequently and treatment depends on your circumstances. The above is general information, not advice.
This process is written from the seller’s perspective and is not strictly sequential: the buyer list is built while the business is being prepared, and legal drafting runs alongside due diligence.
Decide what matters most: price, timing, your ongoing role, what happens to your team, a full exit or a retained stake. Shareholders do not always want the same things, and every later decision comes back to this.
Get the business ready before going to market. That means preparing the financial information buyers will scrutinise, dealing with anything that could reduce the price or slow the process down, and preparing the information memorandum.
Identify who has the strongest strategic reason to buy, across trade acquirers, private equity, consolidators and search funds. A wider, better-researched list means more interested parties, which is what improves price.
Buyers are approached with an anonymous profile first, so interest can be gauged without exposing the business. Once vetted and under NDA, additional information is released and management meetings follow.
Indicative offers are benchmarked on more than headline price: consideration mix, deliverability, funding certainty and fit. Running interested parties in parallel is what gives you leverage to improve terms.
A preferred buyer is selected and terms formalised, usually alongside a period of exclusivity. This is the point of maximum leverage, and terms are very difficult to change once agreed here.
The buyer and its advisers examine the business across financial, tax, legal, commercial, technology and HR. Managing the flow and pace of information keeps the timetable on track and limits the scope for the buyer to reduce the price on the back of what it finds.
The share purchase agreement, disclosure letter and ancillaries are drafted alongside diligence. Completion mechanics are agreed and the deal completes, followed by completion accounts and any earn-out administration.
Most owners sell a company once. The buyer across the table may have done it thirty times. That asymmetry is the main reason to take advice, and it is most valuable earlier than owners expect: the decisions that determine value are made in preparation and at heads of terms, not at completion.
An adviser builds competition between buyers, defends the valuation, negotiates the structure line by line, keeps diligence and drafting moving, and acts as a buffer so you preserve the relationship you will need after completion.
Gerald Edelman’s Deal Advisory team advises owner-managed and mid-market businesses on exit readiness, valuation, sale processes, buy-side origination, due diligence and integration. If you are considering a sale, get in touch with our Deal Advisory specialists. You may also find our guide to selling a business in the UK useful.
Last reviewed by our Corporate Finance team: September 2026
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