How can a business sale be structured?

Most owners who start thinking about selling picture one moment. Hand over the keys, take a lump sum, walk away. That is only one of several ways a sale can actually go.

The structure of a deal matters as much as the headline price. Two offers of the same amount can mean very different things, depending on how the money arrives, when, and on what condition.

This guide sets out the five structures you are most likely to meet, in plain English, and explains why a real deal is often more than one of them at once.

This guide is for owners of established UK businesses, whether thriving or under pressure, whoever you eventually sell to.

The buyer takes the whole company: the shares, not just the trading activity underneath it. Contracts, staff, history, whatever is sitting in the company's past, all of it transfers with the shares. The company's legal identity carries on unchanged. Only the ownership changes.

This is usually the simplest paperwork, because nothing needs to be individually reassigned, contracts, licences and agreements stay in the company's name. The trade-off is that the buyer inherits the company's history along with its future, so they will look hard at what is in it before agreeing a price.

Rather than buying the company itself, the buyer picks what they actually want: stock, equipment, contracts, sometimes the name, and leaves the rest behind in the old company.

This is common when only part of a business is worth taking on, or when a buyer wants a clean start without inheriting whatever is sitting in the company's past. It usually means more paperwork than a share sale, because each asset and contract has to be individually transferred, but it gives the buyer more control over exactly what they are taking on.

Part of the price is paid over time, out of what the business earns after you leave, rather than in full on completion. In effect, you are lending the buyer part of the purchase price, to be repaid on agreed terms.

This is most of what we do ourselves. It gives the buyer a real reason to make the business work well, because they cannot pay you without doing so. It can also mean a higher total price than an all cash buyer would offer, because the buyer is taking on less risk up front.

Part of the price depends on how the business performs after completion, measured against agreed targets over an agreed period.

This is useful when buyer and seller genuinely disagree about what the business is worth today, and would rather let the numbers settle it than argue over one figure neither side believes. It works well when the targets are clear and fair. It becomes a problem when the targets are vague, or depend on decisions the buyer makes after you have left and no longer control.

The buyer borrows against the business itself, its assets or its future cash flow, to fund most of the purchase price, rather than paying it out of their own resources.

From a seller's point of view this can look identical to a straightforward cash sale. The money still arrives as agreed. The difference sits behind the scenes, in how the buyer has financed the purchase, and it tends to matter more in larger deals with institutional buyers than in a typical owner to owner sale.

A share sale can be paid for partly in cash, partly through seller finance, partly against future performance. A leveraged buyout and a seller financed deal are not opposites either. Plenty of real deals are both at once, some of the price from a loan, some from the seller agreeing to wait.

If someone puts a deal in front of you and cannot plainly explain which of these it is, or which mix, that is worth asking about before you sign anything.

This guide is general information, not financial, legal or tax advice. Every business and every sale is different. Take advice from your accountant and solicitor before acting on anything here. Exit Ready UK Ltd, company number 17310523, registered in England and Wales.