If you’re a business owner thinking about the future – whether that means stepping back, retiring, or simply preparing for the unexpected – succession planning should be high on your agenda. At a recent seminar hosted by Richard Coulthard of Ison Harrison Solicitors and Simon Roberts of Azets, attendees were guided through the key legal, financial, and strategic considerations that can make or break a successful business exit.
Here’s a deeper dive into the top 10 insights shared during the session:
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Understand Why You’re Exiting
Every exit is personal. Whether you’re motivated by retirement, a new venture, or family considerations, your reasons will shape the structure and timing of your exit. Are you looking for a clean break, or do you want to stay involved in some capacity? Understanding your goals helps you plan more effectively—and avoid surprises.
In particular, it is important to understand your timetable for an exit with an exit often occurring in two stages, firstly the sale or transfer of ownership of the business and secondly the date on which you cease to be employed or engaged by the business. These two dates may not be the same.
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Know Your Succession Options
There’s no one-size-fits-all solution. The seminar explored four main routes:
- Trade Sale: Offers a clean exit and often a higher upfront payment, but finding the right buyer and navigating due diligence can be challenging.
- Management Buyout (MBO): Keeps control within your team but may involve complex financing and long payment terms as the management team are unlikely to have the funds to pay for the business.An alternative would be a ‘Management Buy-In’ which may involve recruiting an individual or team to ultimately take on the business.
- Employee Ownership Trust (EOT): Offers tax advantages and boosts employee engagement, but requires careful planning and long-term commitment.
- Family Succession: Preserves legacy and builds generational wealth, but comes with emotional and financial complexities.
Each option has its own risks and rewards—choosing the right one depends on your business, your people, and your vision.
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Retain and Reward Key People
Your team is your most valuable asset. Identify key staff and consider how to retain them through the transition. Share schemes, bonuses, and clear communication can help maintain morale and continuity. Remember: a motivated, stable team can significantly increase your business’s value.
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Structure the Deal Carefully
Are you selling shares or assets? What’s included in the sale – and what’s not? Understanding the tax implications, valuation methods, and legal frameworks (like SPAs and APAs) is essential. Don’t fall into the “double tax trap”- get expert advice early.
The seminar also considered the potential use of creating a group structure to enable the sale of parts of the business. In certain circumstances, it may be possible to use the overall holding company to create a ‘family investment company’ or similar to mitigate inheritance tax or to distribute wealth amongst members of the family.
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Secure Your Customer Base
Buyers want confidence that your customers will stick around. Review contracts, payment terms, and customer concentration. If a few clients make up a large portion of your revenue, that’s a risk you’ll need to manage and explain.
Typically businesses will achieve a higher multiple if they have customers on long term retained contracts.
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Get Your Financial House in Order
Clear, credible financials are non-negotiable. Know your debt terms, cash flow, and working capital. Be ready to explain your numbers—and back them up. A well-prepared financial picture builds trust and can boost your valuation.
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Don’t Overlook Property, IT & Integration
From lease agreements to software licenses, these practical details can delay or derail a deal. Think ahead about how your business will integrate with a buyer’s systems and culture. Address potential issues like TUPE, redundancies, and data ownership early.
From a practical perspective, transferring ownership of software or even implementing secure data lines into premises can take time and needs to be factored in.
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Engage with Regulators
If your business is regulated (e.g. by the FCA, CQC, or SRA or similar), you’ll need to factor in approval timelines, compliance checks, and potential restrictions. Even voluntary registrations can impact buyer confidence—so don’t leave this to the last minute.
This is particularly relevant where businesses are in sectors which require approval of specific individuals, for example registered managers. If these positions are occupied by the business owner then this can make a transition complicated as it will require regulatory approval of new individuals with the relevant skills, training or experience to fulfil that role.
- Understand Deferred Payments & Earn-Outs
It is likely that you not get paid the purchase price in full on completion. Deferred consideration and earn-outs are common, especially when buyers want to tie payments to future performance. Understand how these work, how they’re taxed, and how to protect yourself with appropriate legal safeguards.
- Plan for Tax—Before and After the Deal
Tax planning isn’t just about saving money—it’s about avoiding costly mistakes. From capital gains to inheritance tax, the right structure can preserve wealth and support your long-term goals. Think ahead about reliefs, covenants, and warranties—and get advice tailored to your situation.
Final Thought: Start Early, Exit Smart
Succession planning isn’t something to leave until the last minute. Ideally, you should start preparing 3–5 years before your intended exit. That gives you time to build value, address risks, and shape your business into something that’s not just sellable—but desirable.
Ready to take the first step? Contact Richard Coulthard at Ison Harrison to start planning your future today.
