Thinking of selling your business? Why financial planning should come before valuation

If you’re looking to sell your business, you may think the most important question is: “What’s my company worth?”

However, knowing why you want to sell your business is the key question behind the sale, as this will help clarify your new life goals. You can then consider how much you’ll need to fund those dreams, whether the sale proceeds will be sufficient, and what steps you can take if they aren’t.

The key is to envisage the life you want your wealth to support once your business is no longer at the centre of your world. A financial planner can help you define your new goals and create a plan for how you can use your business sale to turn those dreams into reality.

Read on to find out why financial planning should come before valuation when selling your business.

Think about the life you want once you’ve sold your business, then plan for the sale accordingly

Selling your business is usually a step towards a new chapter, whether that’s retiring early, launching a new venture, or simply creating more free time in your life. It’s a chance to reshape your future, so it pays to think carefully about what comes next.

A good starting point is to revisit your long-term goals. Do you want to use the proceeds to retire and enjoy more time for yourself? Maybe you want to invest in a new project or support your children and grandchildren? Or perhaps you want to settle outstanding debts, such as your mortgage?

Whatever your goals, this is the perfect moment to step back, reflect on what matters most, and update your financial plan to ensure your money aligns with your ambitions.

Depending on your priorities, you might consider using the proceeds of the sale to:

Contribute to your pension to boost your retirement income
Maximise your ISA allowances for tax-efficient savings and investments
Contribute to a child’s or grandchild’s Junior ISA or pension
Set up a trust to manage wealth efficiently and support your beneficiaries
Invest in businesses or schemes that qualify for Business Relief to reduce Inheritance Tax liability.

By preparing well in advance, you can structure the sale in a way that’s tax-efficient and supports your new goals as you transition into the next stage of your life.

A financial planner can help you weigh up your options and create a plan that ensures the sale aligns with your long-term goals.

Adapt your exit strategy to serve your new goals

Ideally, you’ll have an exit strategy in place well before selling your business. But once you’ve clarified what life after the sale looks like, it’s important to adapt that strategy so it supports your new goals while protecting the business you’ve built.

Key areas to think about include:

Succession planning – Who will take the reins once you step away? Think about whether they’ll need a transition period while you gradually step back, and how long that should last.
Tax planning – Do you fully understand the tax implications of selling your business, as well as the reliefs or allowances that could reduce your bill?
Timing – The moment you choose to sell can affect everything from your tax position to your succession plans. In some cases, taking payments in instalments rather than a lump sum lets you use multiple allowances across different tax years.
Investment considerations – Will you retain a minority stake in the business after the sale? If other shareholders are involved, ensure agreements are reviewed and updated to reflect your exit.

Once you’ve mapped out your personal goals, you can adjust these elements to make sure your exit strategy works for you and your business. That way, the sale can mark the start of a new chapter on your terms.

A financial planner can model different exit scenarios to show which best serves your post-sale goals.

The real value of your business sale comes from how it supports your future plans

After you’ve defined your new goals and mapped out your exit strategy, the next step is to undertake a valuation. By planning first, you can approach the process with a clear understanding of how the sale supports your overall goals.

This means the value isn’t just a number – it becomes a tool to help you make informed decisions. You can then assess whether the timing is right and work with a financial planner to structure the sale for tax efficiency.

Ultimately, integrating your goals with the valuation ensures the sale of your business aligns with your wider vision, rather than being treated as an isolated transaction.

A financial planner can help you develop a plan for your business sale and your life afterwards

A financial planner can help you develop a plan for both the sale of your business and your life afterwards. They can guide you in structuring the transaction to make it as tax-efficient as possible, advise on how to use the proceeds, and help ensure your long-term financial goals are achievable.

Beyond the numbers, a planner can help you explore what you want your next chapter to look like, whether that’s retiring early, starting a new venture, supporting your family, or pursuing personal passions. By aligning your exit with your life goals, you can approach the sale holistically and understand its place as a stepping stone towards your future.

To speak to a financial planner, get in touch.

Email [email protected] or call us on 01625 466360.

Please note

This article is for general information only and does not constitute advice. The information is aimed at retail clients only.

All information is correct at the time of writing and is subject to change in the future.

Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.

The Financial Conduct Authority does not regulate tax planning or trusts.

A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available.

The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.