Most owners sell a business once. The buyer across the table has done it eleven times, has a corporate finance adviser, a diligence team and a law firm, and knows exactly which points are worth conceding and which are worth taking. That asymmetry — not valuation theory — is the reason M&A advisers exist, and it is the reason the fee is usually recovered several times over in the terms rather than the headline price.
What an adviser actually does
On a sale, the work runs from preparation through to completion:
- Preparation — normalising the financials, identifying and evidencing the adjustments that support an adjusted EBITDA, fixing the issues that would otherwise surface in diligence, and assembling the information memorandum;
- Buyer identification — mapping trade buyers, competitors, overseas entrants and private equity, and running an approach that creates competition without broadcasting the sale;
- Running the process — managing the data room, controlling information flow, keeping multiple parties to a timetable so that offers arrive together rather than sequentially;
- Negotiation — heads of terms, then the detail that follows: the price mechanism, the escrow, the warranty package and the earn-out;
- Completion — coordinating legal, tax and diligence workstreams to a closing date, and the completion accounts that follow it.
On a buy-side mandate the same skills point the other way: origination, valuation discipline, diligence scoping and integration planning.
Price is not the number that matters
The headline figure is the most negotiated and often the least important term. Four mechanisms determine what the seller actually receives:
The price mechanism. A locked box fixes the price by reference to a historic balance sheet, with value accruing to the buyer from that date; completion accounts adjust the price after closing for actual cash, debt and working capital. Each favours a different party depending on how the business is trending, and the choice is worth as much as several points of multiple.
The working capital peg. The normalised level of working capital the business must deliver at completion. Setting it above the true average transfers value to the buyer — the seller has to leave more in the business — and it is negotiated by people with a much better feel for the seasonality than the seller's memory provides.
Deferred consideration and earn-outs. Money contingent on future performance, over a period in which the seller no longer controls the business. The tax treatment differs depending on whether the right is ascertainable, and the commercial protections — what the buyer may and may not do during the earn-out period — matter more than the formula.
Warranties and indemnities. The caps, the baskets, the time limits, the disclosure process, and whether warranty and indemnity insurance is used to bridge the gap. A seller who gives unlimited warranties has not sold the business; they have financed it.
Diligence, and doing it to yourself first
The buyer will examine everything: quality of earnings, revenue concentration, contract terms and change of control clauses, employment status and payroll compliance, tax positions still within time, the statutory books, intellectual property ownership, and the pension position.
Every problem found by a buyer is a price reduction, an indemnity or a retention. Every problem found and fixed by the seller beforehand is none of those. Vendor due diligence — commissioning the work on your own business before the process starts — is standard in larger deals and worth considering well below that level, because it converts surprises into disclosed facts.
The recurring issues in owner-managed businesses are predictable: share registers that do not reconcile, options granted informally, related party transactions never documented at arm's length, and a customer concentration nobody had quantified.
Tax structuring belongs at the start
The decisions that determine the tax outcome are taken before heads of terms, not after. Whether the deal is a share sale or an asset sale; whether shareholders qualify for business asset disposal relief and have done for the required two years; how consideration is split between cash, shares and deferred elements; and whether a pre-sale reorganisation is needed to separate assets the buyer does not want.
Each of those is cheap to address early and expensive or impossible to address once terms are agreed. A shareholder who discovers at signing that they have held 4.9% for two years has usually lost a relief that cannot be recreated — usually, not always, because EMI shares are outside the 5% test and a holding diluted by a share issue may be rescued by an election made at the time. Neither helps the shareholder who simply never held enough.
Choosing an adviser
Look for transactions of your size in your sector rather than brand; ask who will actually run the deal day to day; understand the fee structure, including the retainer, the success fee and what happens if the process stops; and be clear about the timetable, because most sales take six to nine months from preparation to completion and the ones that take longer usually do so because preparation was skipped.
Acumon works on both sides of transactions through selling your business, buying a business, financial and vendor due diligence, and valuations — with the tax structuring handled alongside rather than afterwards. If a sale is planned for next year, the preparation starts now.