The Owner-Manager's Exit Checklist: What to Do in the Twelve Months Before You Sell

The Owner-Manager's Exit Checklist: What to Do in the Twelve Months Before You Sell

James Dixey — Founder and Managing Director    ·    8 min read    ·    James Dixey Limited

The work that materially moves your exit price — in our experience, by 15–20% for many owner-managed businesses, though the exact uplift varies — is almost all done in the twelve months before you go to market. Here is the checklist our team would give any owner thinking about a sale in the next year or two, in the order we would work through it.

EXECUTIVE SUMMARY

•  Twelve to eighteen months of focused preparation typically adds a meaningful premium to a sale price — in our experience often in the 15–20% range, though sector and deal-specific. The work is unglamorous but mechanical: clean accounts, clean structure, clean dependencies. There is no shortcut.

•  The non-negotiables: three years of normalised management accounts, a clean DLA and intercompany position, documented operational SOPs, and a second-tier management layer that runs the business when the owner is not in the room.

•  BADR planning matters. The rate rose to 14% in April 2025 and rises again to 18% in April 2026. The relief is capped at a £1m lifetime allowance per individual, so the eight-percentage-point swing costs up to £80k per qualifying shareholder — meaningful, especially stacked alongside the structural decisions about deferred consideration and rollover that follow from it.

•  Start with one thing: get three years of monthly management accounts cleaned up and the DLA cleared down or scheduled. Everything else follows from those two.

Twelve to eighteen months from a possible sale?

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Why twelve months matters

Every owner we meet has the same instinct: "I'll think about a sale when I'm ready to retire." The problem with that timing is that the work which most affects the price is the work that takes a year to do — clean accounts, clean structure, a management layer that runs the business in your absence. By the time you are ready, you have already missed the window to add the 15–20% that the preparation actually delivers.

This is not a marketing line. It is a description of where the gap lies between businesses that sell well and businesses that sell badly. The owners who plan twelve to eighteen months ahead almost always exit at the top of their range. The owners who decide to sell next quarter almost always exit at the bottom.

1.  Get the accounts in order

Three years of clean monthly management accounts is the floor. Not statutory accounts. Not annual figures with no detail underneath. Monthly P&L, monthly balance sheet, monthly cash flow, with the categorisation clean enough that a buyer's diligence team can see exactly where revenue, gross margin and overhead are moving.

Within those accounts, the normalising bridge from reported to underlying EBITDA needs to be evidenced — every personal expense separated, every owner remuneration adjustment to market rate, every related-party transaction explained, every one-off cost identified. In our experience, the gap between reported profit and defensible adjusted EBITDA is 20–40% for a typical owner-managed business in the £1m–£10m range. None of that is in itself a problem. What kills the deal is presenting the gap as a single number with no working underneath.

2.  Clean down the director's loan account and intercompany balances

Unreconciled DLAs and unexplained intercompany balances kill more deals than buyers ever talk about publicly. The fix is straightforward — clear the balance down via dividend (subject to tax planning), document the routes properly, and make sure the closing balance going into completion is either zero or has a clear contractual treatment in the SPA. The same applies to balances with dormant group companies, related-party loans, and any historic loans to or from family members.

Owners often hope the issue will not come up. It always comes up. Buyer's counsel finds it in the first month of diligence and asks for documentation. If the answer is "there isn't any", the deal gets renegotiated. If the answer is "here is the board minute, the tax advice, and the route to clearance pre-completion", it doesn't.

3.  Reduce owner-dependency

Most owner-managed businesses are partly the owner. Buyers will pay something for that — but with a discount, often with an earn-out attached, and the buyer pool narrows to those willing to underwrite the transition. The fix is the longest-running of all the preparation work: twelve to twenty-four months to build a second tier, document the systems, transfer the client relationships, and prove the business runs without you on Mondays.

Concretely: identify three roles you personally cover today (sales lead, finance lead, operations lead, key client relationship, the regulatory contact with CQC or Ofsted, the supplier who only deals with you) and either build a deputy into each over twelve months, or document the transition plan a buyer can execute against. The owners who do this work consistently sell for materially more than those who do not.

4.  Sort the property question

Almost every regulated business has a property question — freehold or leasehold, in the company or held personally, charged against bank debt, sitting in a pension scheme (very common in education and care), with a long-tail lease or one expiring within five years. None of this is fatal, but each variant has a different optimal sale structure, and the structure should be decided before the buyer pool is approached, not during diligence.

For owners with freehold property where the asset value is significant, the OpCo/PropCo question often deserves a dedicated conversation: is the right strategy a single sale of both, a parallel process selling the operating business to a trade buyer and the freehold to a property investor on a long lease, or a sale-and-leaseback before going to market that strips the property question out entirely? These options have materially different tax, deal-shape and proceeds implications. Get the thinking done early.

5.  Understand BADR — and plan around it

Business Asset Disposal Relief — the CGT relief on sale proceeds for qualifying business owners — has changed twice in two years. The rate rose from 10% to 14% in April 2025 and rises again to 18% in April 2026. BADR is capped at a £1 million lifetime allowance per individual; gains above that allowance are taxed at the standard 24% CGT rate. The eight-percentage-point swing between the old 10% rate and the new 18% rate therefore costs up to £80,000 per qualifying shareholder, or up to £160,000 for a couple where both spouses qualify. Not enormous in isolation — but real, and most material when stacked alongside the structural decisions about deferred consideration, rollover equity, and earn-out treatment that follow from it.

This matters in two ways. First, it makes the timing of completion more financially material than it used to be — owners with a credible 2026 process need to know what their post-tax outcome looks like under each rate. Second, it changes the calculus around deferred consideration, earn-outs, and rollover equity, because the tax treatment of those instruments has not moved in lockstep with the headline CGT rate.

None of this is a reason to panic-sell. It is a reason to plan. A six-month conversation with your accountant or a sector tax specialist twelve months ahead of completion is one of the highest-return uses of professional time we see across our pipeline.

6.  Address the regulated-sector specifics

If you operate in care, education, fire & security or a similar regulated sector, there are additional items to work through:

•   Care: the CQC rating trajectory matters more than the snapshot. A current Good or Outstanding rating with an upward trajectory is worth materially more than a current Good rating preceded by Requires Improvement.

•   Education: ISI, Ofsted and EAQUALS inspection currency should be reviewed against the sale timeline. A pre-sale inspection three months before going to market either confirms the rating you can lead with or gives you time to address actions before a buyer sees the report.

•   Fire & Security: BAFE, NSI Gold, SSAIB, FIRAS and IFC certifications should be current and the audit history clean. A lapsed accreditation in a sector where accreditation is the moat will materially affect the price.

•   Cross-sector: any open regulatory action — CQC enforcement, Ofsted re-inspection trigger, HSE investigation, FCA scrutiny — should be resolved or transparently disclosed before a buyer is approached.

Start with one thing

Reading the list above can feel overwhelming. The single highest-impact action you can take this month is to get three years of monthly management accounts cleaned up, with a normalising EBITDA bridge, and to schedule a route to clear down the DLA before completion. Everything else follows from those two — the accounts are the basis of the valuation, and the DLA is the first thing buyer's counsel checks. Get those two right, and the rest of the checklist becomes a sequence of conversations rather than a crisis.

Related: Five things that will kill your business sale before you even go to market.  (/insights/five-things-that-will-kill-your-business-sale)

Twelve to eighteen months from a sale?

Talk to us early. A confidential valuation now identifies exactly which preparation items most affect what your business is worth — and what twelve months of focused work could realistically add to the price.

Get a valuation  →

SOURCES

[1] Business Asset Disposal Relief rate change: 14% from 6 April 2025; 18% from 6 April 2026 (Autumn Statement 2024 / Finance Act 2025). HMRC guidance: Capital Gains Tax for business asset disposal.

James Dixey Limited — Specialist M&A for regulated, owner-managed businesses in Care, Education, Fire & Security and Other Regulated Services.