There are various reasons that you might want to sell your limited company, from retirement, to making a profit, to simply not wanting to run the business anymore.
You can sell your shares to a third party buyer, or if you have any existing business partners, to them. You might also think about transferring your shares to a family member.
If you have any business partners, you will need to work together with them to do this. When transferring ownership, you will need to look at the articles of association and any shareholders’ agreement which often include provisions for buying and selling the shares in your company.
When planning to sell a limited company, you need to consider your shares, assets, liabilities, taxes, professional help and your buyer.
When asking "how to sell a limited company in the UK?", you should also consider how you’re going to get the business ready for sale.
What to consider when getting ready to sell a limited company
To plan for your business's sale, here are some points to take into account. In order to sell, you could either sell the limited company together with its business or to get your limited company to sell its assets.
A sale of a limited company happens when the owner sells the shares. If there is more than one owner, then all of the shareholders will need to agree to the sale.
The assets and liabilities of the business are held by the limited company. When the shares of the limited company are sold, the assets and liabilities are transferred together with the company.
Selling your assets
Instead of selling the shares of a limited company, you could sell the assets of the business. The assets of your company, such as goodwill, equipment, furniture, fixtures, account receivable, inventory and investments could be sold to the new owner directly.
The assets of the company may be sold as a going concern. This is where you sell enough of the assets so that the business continues in its present form. The business then retains its customers, suppliers and employees.
You will want to value your business by appraising each and every asset including goodwill.
Your business is likely to have liabilities such as accounts payable, salaries, taxes and loans.
If the limited company is being sold, generally the liabilities of the business are transferred with the company to the new owner. The buyer will, of course, want to investigate the liabilities before buying the company.
Independent legal advice can help you to sell your business
You will want to weigh up which option is better - to sell the limited company or to sell assets of the business to a buyer.
Understanding the different sale options and getting your business ready to sell can be both confusing and time consuming.
An expert can provide assistance on preparation, sale and transfer as well as evaluating the taxes you need to pay when selling your business. There may be significant tax advantages for a particular course of action.
Credit check of your buyers
Don't forget to credit check your buyers. You don't just start the process of selling your company to anyone who claims that they can afford it.
You need to validate the source of funds of the buyer and how long it takes to complete due diligence of your limited company.
Although the value of your company matters, you also need to pay attention to the character of the buyer and the legal documents that have to be prepared to close the deal and complete the transaction.
You also have to decide on how the payment will be made. Will you require a down-payment while the process of transfer is on-going? Or will the money be received in stages at and after completion? You can decide on that matter and have an agreement with the buyer.
How long does it take to sell a business in the UK?
Luck, timing, keenness of the buyer (and more recently, global pandemics!) can all impact how long it takes to sell a business.
The answer would depend on how well you prepare your business for sale and how patient you are when looking for buyers.
On top of that, your business's revenue, assets, location, and cash flow play big roles in the process.
Can I sell a part of my limited company?
Selling a portion of your limited company means you don't have to run it alone. Your responsibilities will be shared by the new buyer.
However, you should settle how the company is going to be managed with the new shareholder. You need to come to an agreement, and perhaps to enter into a formal shareholders’ agreement, to avoid complications in the future.