Selling Your Business: The Financial Planning to Start Three Years Before Completion

You've built the business. At some point, probably sooner than you think, you'll sell it, wind it down, or hand it to the next generation. The number that lands in your account on completion day feels like the plan. It isn't. It's the raw material for a plan — and most of the decisions that determine how much of that number you actually keep, and how it funds the next twenty or thirty years, need to be made while you still own the company. Wait until a buyer is at the table and the options have already narrowed.

Why three years, not three months

Three years sounds long, but it matches how long some of the relevant structures take to work properly. Pension contributions need several tax years to build meaningfully. Changes to how you extract profit — dividends versus salary, the balance between the two — take time to show up in your personal tax position and in the company's valuation. Trusts, if relevant to your estate, need time before the usual look-back periods stop mattering. A buyer's due diligence will also look more favourably on a business with a clean, well-documented few years behind it than one tidied up in the six months before sale.

Extracting value before you sell, not after

Once the business is sold, the opportunity to take value out of it in a tax-efficient way largely disappears. Retained profits sitting in the company are far easier to deal with as an owner-director, using pension contributions or dividend planning across tax years, than they are to unwind inside a sale structure. A buyer may also value a business with excess cash differently to one that's been run lean — not always in your favour.

• Review retained profits and whether employer pension contributions could extract value more efficiently than dividends

• Check whether multiple years of carry forward on pension contributions are still available before they expire

• Assess whether company-owned assets (property, investments) sit well inside the structure you're planning to sell

• Confirm shareholding structure and ownership periods line up with the reliefs you expect to claim on sale

• Get a realistic, independent view of valuation — not just the number you'd like to hear

The pension question you can't ask post-completion

Once your company no longer exists in its current form, the door closes on employer pension contributions funded from that business. For an owner who has spent years reinvesting profit back into growth rather than their own pension, the final few years before sale are often the last realistic chance to catch up meaningfully, using current allowances and any unused relief from previous years. This only works if it's planned while the business, and the profits, are still there — not raised as an afterthought during legal negotiations.

Structuring the deal: earn-outs, loan notes and timing

Few sales complete as a single clean payment. Earn-outs, deferred consideration and loan notes are common, and each has different tax treatment and different risk — if the buyer's business underperforms post-sale, deferred payments can be reduced or lost entirely. The structure of the deal affects not just how much tax you pay and when, but how much certainty you have about your income in the years immediately after sale. This is a conversation to have with your adviser and accountant before terms are agreed, not after the heads of terms are signed and the structure is effectively fixed.

Building the post-sale income plan now

A sale proceeds figure is not a retirement plan. It needs to be converted into an income strategy — how much comes from pensions, how much from ISAs or general investment accounts, how it's invested for a time horizon that could run several decades, and how it interacts with your spouse or partner's assets and allowances. Modelling this before the sale, using realistic assumptions rather than the number you hope to achieve, tells you whether the deal on the table actually funds the retirement you want — or whether you need to hold out, restructure, or keep working in some capacity.

**If a sale is somewhere on your horizon — eighteen months away or five years — the planning that protects the most value happens now, while you still own the business. Request our free guide, The Pre-Retirement Pension Review, or book a no-obligation call at www.dmfinancialplanning.co.uk to start the conversation early enough for it to matter.**

Important information

This article is for general information only and does not constitute personal financial advice. The value of investments can fall as well as rise and you may get back less than you invest. Tax treatment depends on individual circumstances and may change. A pension is a long-term investment; funds cannot normally be accessed until age 55 (57 from 2028). DM Financial Planning is a trading style of Aegis Financial Planning Limited, authorised and regulated by the Financial Conduct Authority (FCA No. 624298).