Legal essentials for selling a business: 5 things every owner should know

June 23, 2025

Legal essentials for selling a business: 5 things every owner should know

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By Emily Shingler

Selling your business can be one of the most significant decisions of your professional life, and the process can feel overwhelming. Preparation is essential to securing the best deal and ensuring the transaction proceeds smoothly.

Our M&A expert, Emily Shingler, outlines key steps to take before going to market, with a particular focus on preparing for your buyer’s due diligence, and putting your business in the strongest possible position for a successful sale.

1. Take professional advice early

Your professional advisors will play a key role in helping you navigate the legal, tax and financial complexities of selling your business. These may include corporate lawyers, accountants and tax specialists. The earlier you bring them on board, the better. Strong early-stage guidance can streamline the entire process.

Even if you haven’t yet identified a buyer, engaging your advisors now allows you to start planning proactively. A well-coordinated team can help anticipate issues, protect your interests, and guide negotiations to ensure you achieve the best possible outcome.

At Darwin Gray, we have experienced first-hand the benefits of a strong working relationship between sellers and their advisors.

2. Get ahead on Due Diligence

When buying a business, buyers typically conduct detailed due diligence to assess the legal, commercial, financial and tax position of any business they are considering buying. This process will have a big say in the structure of the deal and whether it proceeds at all.

What to expect:

Buyers (or their advisors) will typically issue a legal due diligence questionnaire early in the process. This document can be extensive, covering everything from contracts and intellectual property to litigation history and regulatory compliance. Delayed or incomplete responses may create doubts for the buyer and put the sale in jeopardy.

How to prepare effectively:

• Organise core documents: Gather material contracts (e.g. with customers, suppliers and landlords), insurance policies, employment agreements, corporate records and regulatory licences. Ensure all copies are up to date and legible.
• Review employment policies: Ensure that your staff handbook and policies are current and compliant with employment laws.
• Maintain statutory registers: Your company’s registers of shareholders and directors are often overlooked. If they’re outdated or missing, work with your advisors to update or reconstitute them using internal records and Companies House filings.
• Leverage digital tools: Consider using a secure virtual data room (often set up by your solicitor) to store and manage documents throughout the due diligence process.
• Engage senior staff carefully: Identify if senior employees or outsourced service providers (such as HR or finance providers) need to be involved in gathering documents—while maintaining confidentiality about the sale.

3. Identify third-party approvals and consents

Buyers will want to ensure that acquiring your business doesn’t trigger breaches in existing contracts or legal obligations. You must think about any third-party consents that will be required to sell. Consider whether:

• Your business has loans or debentures in place (especially with banks or commercial lenders) that require lender consent to sell.
• Any material contracts (e.g. leases or supplier agreements) have “change of control” clauses.
• You operate in a regulated industry (such as financial services or healthcare) where third-party or regulatory approvals will be needed.

These consents can take time to secure, so it’s vital to identify them early on and factor them into your timeline.

4. Be honest and transparent

When preparing to sell your business, it can be tempting to avoid highlighting weaknesses or issues with your business, however, full disclosure builds trust with your buyer and protects your position post-sale.

As a seller, you will be asked to give warranties as part of the sale—these are statements about the condition of the business. If these warranties turn out to be inaccurate (for example, if you failed to disclose ongoing litigation), then the buyer may have rights to bring a claim against you for breach of warranty.

Giving thorough and accurate disclosures during due diligence helps to mitigate these risks. Proactive preparation also allows you to manage any known issues (e.g. resolving disputes, renewing contracts or addressing compliance gaps) and prevent them from putting the sale in jeopardy.

5. Consider your employees and the future

Often, the value of a business is tied to its people. Key employees can be instrumental in delivering growth, meeting earn-out targets or supporting a smooth transition.

You may wish to consider:

• Share option schemes – where key staff hold an option over a certain number of shares in the company which will crystalise on a particular event, in this instance, a sale of the business, which allows them to benefit from a sale alongside you. If you already have an employee share scheme in place, then you will need to consider if any proposed sale will trigger the exercise of the options and any notifications you need to make to the employees.
• Earn-out structures that link part of the sale price to performance post-sale. This is common for founders who wish to remain involved.
• Employee ownership trusts (EOTs) – essentially selling your shares to a trust which is run for the benefit of employees. This would be instead of a traditional trade sale or management buy-out. EOTs are becoming increasingly popular for their favourable tax treatment and ability to preserve business legacy.

Final Thoughts

Selling your business is not just about finding a buyer, it’s about presenting your business in the best possible light and navigating the process with confidence. By investing time early in choosing your advisors, preparing your documents and anticipating buyer concerns, you put yourself in a stronger position to secure the right deal.

Done well, preparation not only accelerates the sale but protects your interests and helps maximise the value of everything you’ve built.

If you are considering selling your business, get in touch with our M&A experts using the contact form or on 02920 829 100 to see how we can help.