A trade sale is the most common way to exit a UK owner-managed business. You sell your business to another company. A trade buyer acquires it for strategic reasons: market share, capability, geography, customer relationships, or people. It is a clean exit: you receive cash, and the business moves into new ownership.
How does a trade sale work?
The process typically runs over six to twelve months from appointing an adviser to completion. A corporate finance adviser or business broker prepares an information memorandum: a document describing the business in detail. They then approach a list of potential buyers on a confidential basis.
Interested buyers submit indicative offers. The seller selects a preferred party (or runs a competitive process with two or three bidders), enters an exclusivity period, and the buyer conducts due diligence. Legal documentation follows, culminating in a share purchase agreement and completion.
Who does a trade sale suit?
A trade sale is the right route when the seller's priority is maximising the headline price and achieving a clean exit. Trade buyers often pay more than financial buyers because they can extract synergies from the acquisition. Cost savings, revenue uplift, operational integration. A PE firm or MBO team cannot usually achieve this.
It suits owners who are ready for a full exit and are comfortable with the business being absorbed into a larger group. It is less suitable for owners who want to retain a meaningful ongoing role, protect the culture or brand independently, or keep the business in local hands.
Financial and tax considerations
The key tax consideration for most sellers is Business Asset Disposal Relief (BADR), which reduces the capital gains tax rate to 18% on qualifying gains up to a £1m lifetime limit (as of April 2026, following October 2024 Budget changes). Gains above the limit are taxed at 24% for higher rate taxpayers.
The deal will almost always be structured as a share sale from the seller's perspective, which preserves BADR eligibility and avoids VAT on the transaction. Buyers occasionally prefer asset sales, which have different tax consequences. The structure is a negotiating point.
Sellers should also consider deferred consideration (earn-outs), which are common where part of the price is contingent on future performance. Earn-outs introduce risk that the full price may not be achieved.
| Consideration | Detail |
|---|---|
| CGT rate with BADR (to £1m lifetime) | 18% (from April 2025) |
| CGT rate above BADR limit | 24% (higher rate taxpayers) |
| Typical process duration | 6 to 12 months |
| Adviser fees (CF adviser) | 2 to 5% of deal value, plus retainer |
Pros and cons of a trade sale
Advantages: Highest headline valuations among exit routes; clean exit with cash proceeds; buyer may offer employment continuity for the team; relatively straightforward compared to PE processes.
Disadvantages: Loss of independence and brand identity; risk of cultural disruption to the team; earn-out arrangements can delay full receipt of proceeds; confidentiality is harder to maintain when approaching multiple potential buyers.
This page contains general information only. Speak to a qualified corporate finance adviser or tax adviser before making any decisions regarding the sale or transfer of your business.