Business exit planning: why time is of the essence for owners

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Business exits in 2026 and beyond

For owners, time is of the essence, whatever future they see for their business.

The biggest tax change for business owners last year wasn’t announced in the Budget. Instead, it came as an early Christmas present, with the government finally giving ground on agricultural and business property reliefs on 23 December 2025.

Farmers might have made the running in the campaign against the cuts that would have seen an effective inheritance tax charge of 20% on assets over £1 million, but all business owners will benefit. The government more than doubled the threshold for full inheritance tax relief. Combined with the Budget change to allow unused relief to transfer to surviving spouses, it means a couple can potentially pass on business assets worth up to £5m free of IHT, subject to conditions.

That will be a relief for many, but it’s not the end of the story, and business owners still have some thinking to do.

For a start, the £5 million threshold won’t be enough for every business, and a resulting tax charge could be an existential issue. For these business owners, placing the company in a trust could provide a way out, enabling them to lock in full business property relief (BPR). But time is running out; they have to put it in trust by April to benefit.

In or outside a trust, and regardless of whether the business value is under or over the threshold, the disputes over BPR should prompt business owners to think about their future. Because, for most, their exit will come significantly before their will is read. 

Taking time to get a business exit right

When it comes to business exits, the best advice is to start early. The planning should really begin three to five years before, once you’ve fixed on the time to go. There are several reasons for that.

First, it gives time to address complexities or issues with the business that would impact any sale. No purchaser, whether a trade buyer, private equity or employee owners, wants to find unresolved tax issues, complicated corporate structures or other skeletons in the closet. Identifying and resolving such issues can take time, but it will be worth it when the exit comes.

Second, it gives the business time to build momentum and establish an upward trajectory for its EBITDA. Ultimately, most businesses are sold on a multiple of profits, and buyers want to see an optimistic outlook for the business. Where there’s room to cut costs and boost profits, there is scope to maximise the value you’ll finally extract.

Finally, it enables you to ensure continuity. An effective exit requires a successful handover and for the business to continue to thrive. That’s not just for any new owner’s benefit, who will insist on it. For many owners, a sale will include some form of deferred consideration. Owners must develop a succession plan, foster future leaders and put in place strategies and incentives to retain key employees through the transition.

There are no shortcuts to an optimal exit. 

Last things first: Planning your future

If exit can be a long process, though, the first step is to get a clear vision of the end goal. It’s important to think through your ideal timing and your ongoing role, if any, with the business. For some, a sale or succession means moving straight on. Others want to continue as a consultant or chairman.

It’s also important to consider your whole life after exit, whether that’s in retirement or starting a new business. Clear thinking about your goals and requirements will inform what you want to achieve from an exit, both financially and in terms of ongoing ties to the business.

Sometimes, a sale may not be the answer, and a voluntary liquidation or transfer to an investment vehicle is the most likely solution. Employee ownership trusts, even after changes in the recent Budget, can still offer options for the right business. An adviser can help put ambitions in perspective and establish if they’re realistic, as well as moving plans forward and working through the tax implications.

Regardless of what you want for you and your business, it pays to start your planning early and clarify your goals. You’re much more likely to find the right exit if you know what you want to be on the other side.

To discuss a future after your business, contact Stuart Wright, Partner in S&W’s Harrogate office: stuart.wright@swgroup.com or visit the website www.swgroup.com.

You can also download S&W's guide to selling your business via this link. 

Or find out about its business exits panel with JustPark Founder Anthony Eskinazi and former FatFace CEO Louise Barnes here.