The most common way of selling your business outright is through a 'trade sale' to another business, usually already involved in the same industry. This can be achieved through an intermediary 'deal maker' who can approach competitors on your behalf on a no names basis. They can also help groom your business for sale and suggest potential purchasers, as well as advise you on a realistic sale price. Other sale possibilities include selling the business to its management (a management buyout or MBO) or to another investor such as a venture capitalist.
You may want to sell only part of the business. Your options will include selling a part of your shareholding - to realise part of your investment - or issuing new shares for sale - to raise additional funds for the business. You might sell to an investor such as a venture capitalist, or another business might be interested in making a strategic investment in your company.
Alternatively, you might float your company on an exchange such as AIM (the London Stock Exchange's market for smaller companies) selling shares as part of the process. Floating your company is a more complex and time-consuming process, and is typically part of a strategy for raising funds to grow the business, rather than simply selling out.
If you wish to retain ownership but realise part of your investment, it may be possible to restructure the company's finances. For example, you might be able to increase bank borrowings and sell some of your shares back to the company.
Your options may be limited by the circumstances such as the business's profitability and cash position. They may also be limited by any shareholders' agreement, partnership agreement or a company's articles of association. For example, you might be required to offer your shares to existing shareholders before you can offer them to outsiders.
You may need to take into account the different tax implications of selling company shares as compared to the sale of company assets (eg. a 'business sale'). Where a company sells its business (eg. its business premises, goodwill, stock, customer lists) there will be a potential double tax charge on the proceeds of sale: the proceeds will potentially be liable to corporation tax once received by the company; and where the proceeds are then distributed to the shareholder (eg. by way of dividend or by winding up the company), those amounts will also be subject to tax in the hands of the shareholder. If, however, you sell your shares in the company, the proceeds will generally only be liable to tax in the hands of the shareholder; the potential double charge to tax arising on a business sale is avoided.
As a seller, a sale of the shares of the company is generally a better option than selling the business of the company.
