By Chris Hylands, Director, Deal Advisory and Angela Keery, Director, Tax Advisory Services
Having chosen between a bilateral and a competitive process, the next question for most owners is a practical one: what actually happens now?
Most owners sell a business only once. The buyer, by contrast, may have done it dozens of times — supported by an experienced corporate development team, sharp lawyers, and seasoned advisers. That imbalance is one of the most underestimated risks in any transaction. Headline price tells you very little about what a seller actually receives, or about the protections and obligations attached to it — a great deal of value, and a great deal of risk, sits in the detail.
This article walks through what to expect from a typical sale process, and where experienced advisers make the biggest difference.
The shape of a typical process
While every transaction is different, most sale processes follow a recognisable arc. From appointment of advisers to completion, this usually spans six to nine months — sometimes longer where complexity or diligence findings require it.
The main stages include:
- Preparation, positioning, and information gathering
- Approach to buyers under non-disclosure agreement (NDA), supported by an information memorandum (IM)
- Initial indicative offers (IOIs), site visits, and management presentations
- Selection of a preferred bidder, leading to a letter of intent or heads of terms (LOI)
- Due diligence — financial, tax, legal, commercial, and operational
- Negotiation of the sale and purchase agreement (SPA) and disclosure
- Completion and post-completion matters
Each stage carries its own pressure points. The strongest outcomes come from anticipating them — not reacting to them.
Marketing and approaching buyers
The IM is the first detailed view of the business that prospective buyers will see. It is not simply a brochure — it sets the narrative, anchors valuation expectations, and frames how the business should be understood.
A well-constructed IM presents historical performance credibly, articulates the growth story, and pre-empts the obvious questions a buyer will ask. A poor one leaves value on the table before negotiations even begin.
Approach strategy matters too. Identifying the right universe of buyers — strategic, trade, and financial — and engaging them in the right sequence is where advisers create early competitive tension.
Initial offers and selecting a partner
Indicative offers (IOIs) give the first real read on value. They are non-binding, but they shape the negotiation that follows.
The instinct to focus on headline price is understandable, but rarely complete. Deal structure — cash at completion versus deferred consideration, earn-outs, rollover equity, working capital mechanics — can shift the economic outcome materially. A higher headline offer with significant deferred or contingent consideration may deliver less than a lower, cleaner bid.
Advisers add value here by comparing offers on a like-for-like basis, testing assumptions, and identifying which bidders are credible, deliverable, and aligned with shareholder objectives.
Heads of terms: the document that sets the tone
The letter of intent or heads of terms is short, usually non-binding on price, but disproportionately important. It establishes exclusivity, sets the negotiating framework, and locks in positions that are very hard to revisit later.
Areas often overlooked at this stage — working capital definitions, debt-like items, treatment of surplus cash, scope of warranties, earn-out mechanics — can quietly erode value during the SPA negotiation.
Time spent getting heads of terms right almost always pays back several times over.
Due diligence: where deals are tested
Due diligence is the phase in which deals most often slow down, lose momentum, or fail. Buyers will examine financial performance, tax position, legal contracts, commercial relationships, operational systems, and management capability in significant depth.
Good preparation — including vendor due diligence where appropriate — allows issues to be identified and addressed on the seller’s terms, rather than discovered by the buyer at the worst possible moment.
Tax diligence is a particular area of focus. Buyers inherit historical tax risk on a share sale, and unresolved exposures can lead to price chips, expanded indemnities, or extended escrow arrangements. Ensuring tax affairs are accurate and well documented, and that any optimisation of structure has been completed well in advance, protects both value and momentum.
Advisers manage this phase by controlling information flow, anticipating buyer concerns, framing responses constructively, and pushing back where requests are excessive or out of scope.
The SPA: where value is won or lost
The sale and purchase agreement is where commercial agreement becomes legal commitment. It is also where some of the most consequential negotiations take place.
Key areas typically include:
- Consideration mechanics — locked box versus completion accounts, working capital pegs, treatment of cash and debt
- Deferred consideration and earn-outs — what is paid, when, against what targets, and how protected
- Warranties and indemnities — the seller’s contractual promises about the business
- Limitations of liability — caps, time limits, de minimis thresholds, and basket arrangements
- Tax covenant and tax warranties — the buyer’s protection against historical tax exposures
- Restrictive covenants — non-compete and non-solicit obligations on the seller post-completion
Each of these has both a commercial and a tax dimension. The earn-out that looks attractive at the negotiating table may carry different tax treatment from the cash element; the warranty cap that feels acceptable may matter enormously two years later. Advisers who have negotiated these terms many times know where to push, where to concede, and where to insist.
Managing the human side of the process
A sale process is intense. Management must continue to deliver day-to-day performance — any dip in trading during diligence creates immediate risk to value — while supporting an extended programme of meetings, information requests, and decision-making.
Confidentiality must be maintained. Buyer behaviour must be managed. Owner energy must be preserved through what is often a months-long negotiation.
Much of what good advisers do is invisible to the client: keeping bidders engaged, maintaining tension without losing momentum, absorbing pressure that would otherwise land on the management team, and ensuring decisions are made deliberately rather than reactively.
Where advisers earn their fee
Headline fees attract a lot of attention; the value created (or protected) does not always get the same airtime. In our experience, experienced advisers earn their fee in a handful of places:
- Constructing a credible narrative and a competitive process
- Negotiating heads of terms that protect value rather than concede it
- Managing due diligence to maintain momentum and minimise price chips
- Pushing back effectively on SPA terms, particularly around mechanics, warranties, and tax
- Coordinating across corporate finance, tax, and legal so the seller gets one joined-up view
- Keeping owners and management focused on the business while the process runs
A sale process is not just about getting to a deal. It is about getting to the right deal — and protecting it through to completion.
If you are considering a sale and would like to understand what the process involves, contact Chris on chris@hnhpartners.co.uk or 07715 276 083, or Angela on angela@hnhpartners.co.uk or 07704 825462 to find out how HNH can assist.
ENDS