Here’s something we see more often than you’d think.
A business owner reaches the point where a sale feels genuinely possible: a conversation with a potential buyer, an approach out of the blue, or simply a growing sense that the time might be right.
And somewhere in those early discussions, it becomes clear that decisions made years earlier, about ownership structure, remuneration and pension contributions, have quietly shaped what’s now possible. Not because anything was done wrong, just because exit planning wasn’t on the agenda until the exit was.
If you’re building a successful business and a sale still feels like a distant consideration, this is worth reading now.
Why Does This Keep Happening?
Research suggests that many business owners believe exit planning should begin around five years into running a business. In practice, meaningful action often happens considerably later, and some never seek professional advice on it at all. That’s quite a gap between intention and reality.
It’s easy to understand why, though. When you’re running a growing business, the to-do list is never ending!
The exit feels abstract, distant and frankly a bit disloyal to a business you’re still genuinely invested in. There’s cashflow to manage, staff to look after, clients to serve. Exit planning feels like something for future you, and future you is very busy right now too.
The problem is that the business doesn’t wait. Every year, decisions are made about how you’re paid, how the business is owned and how profits are distributed that will directly affect your exit outcome, whether you’re thinking about it or not. By the time a buyer is sitting across the table, most of those decisions are already made.
What’s Actually at Stake
Selling a business in the UK is about a lot more than landing on the right number. What you actually walk away with depends heavily on decisions that were made long before any buyer came along.
Ownership and shareholding structure, how remuneration has been drawn over time, capital gains positioning, pension funding in the run-up to a sale – all of these influence what the deal ultimately looks like for you personally, and by the time heads of terms are being discussed, most of these are effectively fixed.
Business Asset Disposal Relief, for example, can still reduce the CGT rate on qualifying gains, though the relief is less generous than it once was, and eligibility depends on conditions being met for a sustained period before any disposal.
It’s not something that can usually be arranged once a buyer appears. Similarly, pension contributions made in the years ahead of a sale can be highly tax-efficient, provided they fit within the relevant pension allowances and satisfy the rules for employer contributions.
None of this is simple to slot into place at short notice. These areas depend on timing, eligibility and proper coordination between your financial planner, accountant and legal advisers, and that coordination takes time. Which is usually exactly what’s missing when owners start thinking about it too late.
The Difference Early Planning Actually Makes
When we work with business owners who’ve thought about their exit in advance, even loosely, even without any firm intention to sell, the conversations feel meaningfully different.
They tend to have more control over timing. Because their personal finances aren’t entirely dependent on the business performing, they’re not being pushed into a transaction by circumstance. They can wait for the right offer, or choose not to sell at all in the end.
They’re in a stronger negotiating position. A business that runs well without its owner, with clear processes, a capable team and tidy financial records, is simply worth more to a buyer than one that relies heavily on one individual. (Buyers notice these things – they always do.)
And they’re clearer about what comes after. Post-exit planning – how proceeds are invested, how income is structured, what the transition to the next chapter actually looks like – is something they’ve already started to think through, rather than facing it all at once in the weeks after a sale completes. Because that particular to-do list is longer than it looks.
None of this happens automatically. It’s the result of starting the conversation early and coming back to it regularly as things change.
Exit Planning Isn’t About Selling, It’s About Options
This might be the most important point, especially for business owners who have absolutely no intention of selling any time soon.
Exit planning isn’t a commitment to sell. It’s a way of making sure the business supports your life, now and in the future, rather than quietly running it.
A useful set of questions to sit with:
- Could you step back from the business for a while if you needed to?
- Could it cope without you if something unexpected happened?
- Does your personal financial security depend almost entirely on the business continuing to perform?
If the honest answers are a little uncomfortable, that’s worth knowing, and worth addressing, regardless of whether a sale is ever on the cards. Building a business that gives you genuine flexibility is valuable in itself. The fact that it also makes a future exit more straightforward is, frankly, a bonus.
When Should You Start?
The straightforward answer: as early as possible, and ideally at least five years before any intended exit, though the right window depends on the business, the owner’s personal finances and the likely route out.
The more honest answer: whenever you’re ready to think about it, because starting now is always better than starting later. There’s no perfect moment, and waiting for one is usually how years pass without much actually happening.
If a sale or transition is something you can even vaguely imagine happening in the next decade, it’s probably worth having the conversation.
How IFP Can Help
At IFP, we work with business owners at the personal financial planning level. We’re not transaction advisers or accountants, but we sit alongside those relationships, working with your accountant or solicitor where appropriate, and focus on what an exit means for you and your family specifically.
In practice, that means working through the financial decisions that matter most in the years before a sale: how remuneration is structured, how pension funding can be used effectively ahead of an exit, how capital gains exposure is managed, and how sale proceeds are invested and structured once they’re realised.
We’re independent, which means our advice isn’t tied to products, providers or transaction fees, and we take a joined-up approach – connecting exit thinking to retirement planning, investment strategy and legacy considerations, so that nothing gets looked at in isolation.
An initial conversation with us is straightforward and without any obligations. If it confirms you’re already well placed, that’s a genuinely useful outcome in itself.
If the question of what comes next has started to surface, even quietly, even without any urgency, it’s worth making space for it sooner rather than later.
Explore our approach to exit planning for business owners, here.
This article is for information purposes only and does not constitute financial, investment, tax or legal advice. Tax treatment depends on individual circumstances and may change in the future. Professional advice should be sought before taking action.
