Each founder exits finally. The one query is whether or not you select the timing, the client and the phrases, or whether or not sickness, burnout or a foul market chooses for you.
For many UK founders, there are 4 lifelike routes out: a commerce sale, a administration buyout, an worker possession belief (EOT) and household succession. Every fits a distinct sort of enterprise, and a distinct sort of founder.
Right here’s how they examine, what they value in tax and what to weigh up earlier than you decide one.
What’s an exit technique?
An exit technique is your plan for leaving the enterprise you constructed: who takes over, the way you receives a commission on your stake and when it occurs.
It’s much less a single occasion than a sequence of selections about timing, tax, individuals and cash, and the sooner you make them, the extra choices you retain.
For founders of small and medium-sized companies, the stakes are private in addition to monetary, as a result of the enterprise is commonly each your earnings and your pension.
Route 1: Commerce sale
What it’s: promoting the enterprise to a different firm, sometimes a competitor, a provider or a bigger agency that wishes your clients, group or expertise. Non-public fairness consumers work in an identical method.
Why founders select it: it often delivers the best headline worth and the cleanest break. A strategic purchaser could pay a premium as a result of what you are promoting is price extra to them than it’s to you.
The catch: due diligence is intrusive and might drag on for months, and offers do fall over late. A part of the worth is commonly deferred by way of an earn-out, which retains you tied to the enterprise and paid provided that it hits targets. Your group’s future additionally results in another person’s arms.
The tax: founders promoting shares in a buying and selling firm can typically declare Enterprise Asset Disposal Reduction (BADR) in the event that they meet the circumstances.
The speed rose to 18% from 6 April 2026, up from 14% the 12 months earlier than, on qualifying good points as much as a £1 million lifetime restrict. Good points above which might be typically taxed at as much as 24%.
Greatest for: founders who need a full worth and a clear break, with a enterprise a strategic purchaser pays up for.
Route 2: Administration buyout (MBO)
What it’s: your senior group buys the enterprise from you, often funded by a mixture of their very own financial savings, financial institution debt, vendor finance and generally personal fairness backing.
Why founders select it: the consumers already know the enterprise inside out, so diligence is lighter, confidentiality is less complicated, and your tradition is extra prone to survive. It can be phased, letting you step again progressively relatively than strolling out on day one.
The catch: managers hardly ever have the money to match a commerce purchaser’s worth, so anticipate a decrease valuation, deferred funds or each. That makes you, in impact, a lender to your successors, and your payout is determined by how they carry out.
There’s additionally a clumsy battle of curiosity in negotiating in opposition to individuals you continue to work with, so get an impartial valuation and separate authorized recommendation.
The tax: you’re nonetheless promoting shares, so BADR can apply on the identical phrases as in a commerce sale.
Greatest for: founders with a powerful second tier of managers and a enterprise that throws off sufficient money to service the debt.
Route 3: Worker possession belief (EOT)
What it’s: you promote a controlling stake to a belief that holds the shares on behalf of all of your staff. The belief hardly ever pays you in full on day one. As a substitute, it pays you out of the corporate’s future income, often over a number of years.
Why founders select it: it protects your legacy and rewards the individuals who helped construct the enterprise, and the corporate stays impartial.
Tax has additionally been a giant draw, although that has modified. The Autumn Finances 2025 lower the capital good points tax reduction on EOT disposals from 100% to 50% of the acquire, for disposals from 26 November 2025.
You may’t declare BADR on the half that continues to be taxable, which works out at an efficient fee of round 12% for higher-rate taxpayers. That doesn’t rule an EOT out, however the numbers now want working rigorously earlier than you commit.
The catch: you’re paid from future income, so a enterprise that stumbles can depart you brief. The worth needs to be independently valued, trustees have authorized duties, and setup is specialist work. Additionally, you will want a administration group able to run the corporate with out you.
Greatest for: worthwhile, cash-generative companies with a powerful group tradition, run by founders who worth legacy over the best potential worth.
Route 4: Household succession
What it’s: passing the enterprise to your kids or different family, by reward, sale or a gradual switch of shares.
Why founders select it: the enterprise stays within the household, your successor already is aware of the enterprise, and the handover can occur over years relatively than months.
Tax reliefs can also apply, however the guidelines have been shifting, so take specialist recommendation earlier than you switch any shares.
The catch: the emotional facet. Is the subsequent era prepared, and genuinely in a position? What about siblings who don’t work within the enterprise? Household and enterprise get tangled quick, and you might not obtain a lump sum to fund your retirement, so plan your personal funds individually.
Greatest for:household companies with a succesful, prepared successor and a founder who doesn’t want the total worth of the enterprise to retire.
How to decide on the correct exit route
There’s no universally finest exit, solely the perfect match for you and what you are promoting. Begin with 4 trustworthy questions:
- How a lot do I want, and when? A commerce sale often maximises the upfront worth. MBOs, EOTs and household transfers often pay out extra slowly.
- What occurs to my individuals? A commerce purchaser could restructure. An MBO, EOT or household handover is extra prone to shield jobs and tradition.
- Who is able to take over? If there’s a succesful administration group or successor, insiders change into an choice. If not, an outdoor purchaser could also be your solely route.
- How dependent is the enterprise on me? Whichever route you select, an organization that may’t run with out its founder is tougher to promote and value much less.
Give your self time. Many advisers advocate beginning to put together 2 to three years earlier than you wish to depart: tidying your accounts, constructing your second tier, and documenting how the enterprise runs.
Different exits exist, equivalent to closing a solvent firm by way of a members’ voluntary liquidation, or itemizing on the inventory market, however for many SMEs these 4 routes cowl the lifelike choices.
Exit technique FAQs
Which exit route pays probably the most?
A commerce sale often delivers the best upfront worth, particularly to a strategic purchaser. However worth isn’t the entire story: after-tax proceeds, deferred funds and what occurs to your group all matter.
How lengthy does it take to exit a enterprise?
As soon as a sale course of begins, round six to 12 months is frequent. Getting ready the enterprise beforehand takes longer, which is why early planning pays off.
Do I want an adviser to promote my enterprise?
Sure. At minimal, you’ll need an accountant and a solicitor with M&A expertise, and sometimes a company finance adviser. Tax guidelines on BADR and EOTs have modified lately, so recommendation is price paying for.
Plan the exit earlier than you want it
The very best exits are deliberate years forward, not rushed in a disaster. Determine what you need out of your exit (cash, legacy, freedom, or all three) and work backwards from there.
Converse to an accountant and a company finance adviser early, as a result of the tax guidelines have moved rapidly up to now two years. This text is basic data, not tax or authorized recommendation.
