How to Sell a Business Privately in the UK

Selling your business privately can be a smart move. You stay in control, keep sensitive information confidential, and can often move faster than if you ran a public process.

But a private sale still needs solid legals. Getting the steps, documents and compliance right will protect your price, reduce risk and help you complete smoothly.

In this guide, we break down how to sell a business privately in the UK-from preparing your business for sale, choosing an asset vs share deal, handling due diligence, and drafting the key agreements, through to completion and handover.

What Does Selling A Business Privately Mean?

A private sale simply means you sell your business directly to a buyer without running a broad, public auction or listing process. You might approach a handful of potential buyers (for example, competitors, suppliers, customers or investors you already know) under strict confidentiality.

Compared to a brokered or public process, a private sale usually offers:

• More control over who sees your information and when
• Lower marketing costs and less disruption to staff and customers
• Faster timetable-fewer bidders and simpler negotiations

The flip side is you’ll need to do more of the heavy lifting: preparing sale materials, protecting confidentiality, running due diligence, and negotiating legally robust contracts. That’s where a clear process helps.

Should You Sell Shares Or Assets?

Before you engage buyers, decide the deal structure. In the UK, small business owners typically sell either:

Share Sale (Selling the Company)

You sell your shares in the limited company to the buyer. The company carries on as usual-same contracts, staff, assets and liabilities-just with new owners. A share sale is often cleaner operationally, but the buyer inherits liabilities, so expect closer due diligence and more warranties.

When you sell the whole company, the main contract is a Share Sale Agreement (often called a SPA).

Asset Sale (Selling the Business Assets)

You sell identified assets (e.g. stock, equipment, IP, domain, goodwill) and sometimes assume certain liabilities, but you keep the company shell. Contracts, leases and employees may need to be transferred across. Asset deals can be more work administratively, but buyers like them because they can “cherry-pick” what they take on.

For asset deals, the main contract is a Business Sale Agreement (also called an asset purchase agreement).

How To Choose

There’s no one-size-fits-all. Factors include tax, simplicity, liabilities, third-party consents and the buyer’s preference. It’s wise to get tailored advice early so you can prepare the right paperwork from day one.

Step-By-Step: How To Sell A Business Privately

1) Get Confidentiality In Place

Before sharing any non-public information, put a Non-Disclosure Agreement (NDA) in place with each potential buyer. A robust NDA should cover the scope of information, permitted use, who can see it, return/destruction obligations, and duration.

2) Prepare Your Information Pack

Buyers expect a clear, honest overview so they can price the business and focus their due diligence. Typical contents include:

• Business overview and history
• Financials (3 years P&L, balance sheet, cash flow, current trading)
• Key customers and suppliers (high-level, anonymised until later)
• Employees, roles and salaries (aggregate data at early stage)
• Operations, assets, IP, tech stack, licences and key contracts
• Risks, dependencies and growth opportunities

Keep it factual and consistent-anything you promote now will be tested during due diligence and reflected in warranties later.

3) Decide Your Deal Structure And Price Mechanics

Agree whether it’s a share or asset sale and how the price works. Common approaches:

• Fixed price at completion
• Completion accounts (price adjusted based on actual cash, debt and working capital at completion)
• Locked box (price fixed off a historical balance sheet date, with leakage protections)
• Earn-out (part of the price is paid over time based on performance)

4) Heads Of Terms (Non-Binding)

Once you’re aligned on the big-ticket items-structure, price, payment timing, key conditions, exclusivity, and timetable-document them in Heads of Terms (also called a term sheet or memorandum of understanding). While usually non-binding (except confidentiality, exclusivity and costs), agreeing heads saves time and reduces scope for later disputes.

5) Buyer Due Diligence

Expect the buyer to review legal, financial, tax, commercial and IT aspects of your business. You’ll provide documents via a secure data room and answer follow-up questions. Pace yourself-organise folders, keep a log of Q&A, and align answers with your information pack.

If your premises are leased, line up landlord consent early because assigning a lease can take longer than expected and may be a condition to completion.

6) Draft And Negotiate The Main Sale Agreement

This is the core contract. For an asset deal, it’s your Business Sale Agreement. For a share deal, it’s the Share Sale Agreement. The agreement will cover:

• What’s being sold (assets or shares) and the price mechanics
• Warranties, indemnities and limitations of liability (caps, time limits, thresholds)
• Conditions to completion (consents, financing, regulatory approvals)
• Restrictive covenants (non-compete, non-solicit, non-poach)
• Employee transfers (if applicable) and treatment of benefits
• IP assignment, data transfer, and business handover
• Completion deliverables and post-completion obligations

7) Disclosure Letter And Supporting Documents

The disclosure letter is where you qualify warranties by fairly disclosing exceptions and known issues. It protects you from future warranty claims for matters the buyer knew about. Support it with a well-organised disclosure bundle (contracts, licences, registers, schedules).

8) Employee Transfers (TUPE)

In many asset sales, employees who are assigned to the business will transfer to the buyer under the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE). TUPE preserves employees’ terms and continuity of service and imposes information and consultation duties on the seller and buyer.

Understand your obligations and timelines-our guide to selling your business and employee rights covers key points for small employers.

9) Consents, Assignments And IP

Map all third-party consents. Customer and supplier contracts may need written consent to assign, or you may need a Deed of Novation if you’re switching parties altogether. For leases, plan the landlord process. To transfer brand assets and tech, arrange an IP Assignment covering trade marks, domains, content, code and databases.

10) Completion And Handover

On completion, the parties swap signed documents, transfer funds, deliver physical assets and grant access to systems. You’ll hand over keys, passwords, registers and undertakings to meet any post-completion obligations (like producing completion accounts or assisting with novations). Clear checklists, escrow or solicitor undertakings help everything run smoothly.

What Legal Documents Will You Need?

Your exact bundle depends on the deal, but most private sales include:

• The main sale agreement-either a Business Sale Agreement (asset sale) or a Share Sale Agreement (share sale)
• Heads of Terms (non-binding), confidentiality, and exclusivity clauses
• Disclosure letter and disclosure bundle
• IP assignment, domain transfer, and brand transfer documents
• Deed of Novation or assignments for key customer and supplier contracts
• Lease assignment or new lease (plus any landlord licences/guarantees)
• Board and shareholder approvals (as required under the Companies Act 2006 and your articles)
• Employment transfer or settlement documents (if TUPE doesn’t apply)
• Completion deliverables (board minutes, resignations, releases, stock transfer forms for share sales, chattels transfer for assets)

Avoid generic templates-these documents need to reflect your business, price mechanics, risk profile, and timetable. A tailored set of legals helps avoid disputes and protects your sale proceeds.

Employment, Data And Other Compliance When You Sell

TUPE And Employment Law

As noted, TUPE may apply on an asset sale. You’ll need to provide employee liability information in advance, inform and (if appropriate) consult with affected staff or representatives, and agree how accrued holiday, bonuses and other entitlements will be handled between you and the buyer. Even on a share sale (where the employer doesn’t change), consider how you’ll manage leadership changes, retention bonuses and handover responsibilities.

Data Protection (UK GDPR)

Personal data (customer lists, subscriber data, HR records) is regulated by the UK GDPR and the Data Protection Act 2018. You’ll need a lawful basis to transfer personal data to the buyer, appropriate contractual protections, and to respect any marketing consent rules. Plan how databases are transferred and how privacy notices will be updated post-completion. If you sell a database as an asset, put proper data-sharing and confidentiality terms in the sale documentation.

Regulatory And Industry Consents

Certain regulated businesses (healthcare, financial services, hospitality with premises licences, and others) may need regulatory approvals or licence transfers. Build these into your conditions to completion and timetable. Plan around notice periods and renewal windows so completion isn’t delayed.

Competition And Confidentiality

When giving information to a competitor-buyer, restrict access to “clean teams” where appropriate and avoid sharing competitively sensitive details too early. Post-sale restrictive covenants-non-compete, non-solicitation and non-poaching-must be reasonable in scope, duration and geography to be enforceable. For drafting that holds up, see our guidance on non-compete clauses.

Taxes, Price And Payment Mechanics

Tax can materially change your net proceeds and the buyer’s position, so factor it in early.

On A Share Sale

• Capital Gains Tax (CGT) may apply to your gain on the shares. Subject to conditions, Business Asset Disposal Relief (formerly Entrepreneurs’ Relief) can reduce CGT to 10% up to the lifetime limit on qualifying disposals-speak to a tax adviser about eligibility.
• Stamp Duty on share transfers is typically 0.5% of the consideration.
• Consider whether a locked-box or completion accounts is best for you. Locked-box can give price certainty if the business is stable; completion accounts can capture seasonality or recent improvements but adds complexity.

On An Asset Sale

• CGT may apply at the company level on chargeable gains, and the funds then extracted to owners can trigger further tax-get advice on overall efficiency.
• VAT generally isn’t charged if the transfer is a Transfer of a Going Concern (TOGC) and conditions are met (e.g. buyer carries on the same kind of business). Make sure the contract addresses TOGC and both parties’ responsibilities.
• Stamp Duty Land Tax (SDLT) can apply if property is transferred; other stamp duties may apply to certain assets.
• Apportion the purchase price across asset classes (goodwill, equipment, stock, IP) to reflect commercial value and support both parties’ tax positions.

Earn-Outs And Deferred Consideration

If part of the price is paid later, lock down the performance metrics, reporting obligations, buyer’s operating covenants, audit rights and dispute resolution. Make sure security (escrow, guarantees, or retention) is proportionate so you’re protected if targets are missed or there’s a post-completion dispute.

Common Pitfalls To Avoid

• Sharing too much information too early-use an NDA and stage disclosures.
• Vague Heads of Terms-misunderstandings later can kill deals or cost you price.
• Underestimating consents-landlord, key customers, and licensors can take weeks.
• Skimping on warranties and disclosure-this is where future claims are won or lost.
• Ignoring TUPE-employment consultation mistakes can cause delays and liabilities.
• Missing IP and data steps-without a signed IP Assignment and clear data transfer terms, you may not transfer what the buyer thinks they’re buying.
• Loose transitional plans-define handover support, announcements, IT access and post-completion assistance so day one runs smoothly.

Post-Completion Checklist

The work doesn’t end when the money hits your account. Build a short, practical checklist to close out the deal:

• File stamp duty returns and pay any stamp duty or SDLT within deadlines
• Companies House filings (e.g. officer changes) on share sales
• Bank mandate changes and payment gateway administration handover
• Update insurance, licences, and supplier account ownership details
• Redirect domains, social media admins, and software subscriptions
• Issue internal and external announcements as agreed in the contract
• Complete any required novations or assignments still pending and chase consents

How Contracts, Leases And Licences Are Transferred

In asset sales, you typically need the counterparty’s consent to transfer a contract. If the agreement doesn’t allow assignment, use a Deed of Novation so the buyer replaces you and assumes obligations going forward. For premises, the landlord may require financial information, references or a guarantor before consenting to assigning a lease.

Make a matrix of all material contracts early (customer, supplier, SaaS, payment providers, logistics, maintenance, marketing, finance) and note consent requirements, notice periods and contacts. That way, these don’t become last-minute blockers.

Restrictive Covenants And Your Next Venture

Buyers will usually ask you to agree not to compete for a defined period and territory, and not to solicit customers or staff. Reasonableness is key-overly broad restrictions may not be enforceable under UK law. The duration, activities and geography should be no more than necessary to protect the goodwill the buyer is acquiring.

If you plan to stay in the sector in a different niche, be up-front early and craft covenants to accommodate your plans while still giving the buyer adequate protection.

Key Legal Touchpoints By Deal Type

If You’re Selling Shares

• Main contract: Share Sale Agreement
• Focus: buyer inherits liabilities-expect broader warranties and diligence
• Filings: stock transfer forms, stamp duty, Companies House on director changes
• Continuity: contracts and licences usually stay with the company

If You’re Selling Assets

• Main contract: Business Sale Agreement
• Focus: transferring assets, contracts (via assignment/novation), and employees (TUPE)
• Consents: landlord, licensors, key customers/suppliers
• IP: sign a comprehensive IP Assignment for brand and intangible assets

Getting Ready: Practical Prep That Adds Value

• Clean corporate records: statutory registers, minutes, shareholder details
• Contract housekeeping: locate signed versions, note expiry/renewal dates, identify change-of-control clauses
• Financial hygiene: up-to-date management accounts, reconciliations, tax filings
• IP register: confirm ownership and registrations for trade marks and domains
• HR files: contracts, right-to-work checks, and any ongoing disputes
• Data map: where personal data lives, who can access it, and applicable consents

The more prepared you are, the quicker diligence will move-and the stronger your negotiating position on warranties and price.

Key Takeaways

• Choose the right structure early-asset sale vs share sale materially changes risk, tax and the documents you’ll need.
• Protect confidentiality from day one. Use a Non-Disclosure Agreement and stage disclosures carefully.
• Lock down the big points in Heads of Terms, then capture them in a robust Business Sale Agreement or Share Sale Agreement, with clear warranties, limits and completion mechanics.
• Plan consents and transfers early: assigning a lease, customer contract novations, and a comprehensive IP Assignment keep day one smooth.
• Handle people and data correctly-TUPE obligations and UK GDPR compliance are critical; see our guide on employee rights when selling.
• Get tax and price mechanics right-consider CGT, stamp duty, TOGC for VAT, and whether locked-box, completion accounts or earn-out best fits your sale.
• Don’t leave transfers of key contracts to the last minute-use a Deed of Novation where assignment isn’t allowed, and build consents into your conditions to completion.

If you’d like help preparing or reviewing the contracts to sell your business privately, you can reach us at 08081347754 or team@sprintlaw.co.uk for a free, no-obligations chat.