How to Exit Your Owner Managed Business Successfully

When I ask business owners about their exit plans, 90% say: “I’ll sell to someone in my industry or to private equity.”

That’s one option. But research shows it’s not what most UK business owners actually want—or what works best for most businesses.

What UK Business Owners Actually Want

In April 2024, Shawbrook Bank surveyed 506 UK SME decision-makers at businesses with £5m-£50m turnover about their exit preferences.

The results challenged conventional wisdom:

• Private sale: 27%
• Acquisition: 27%
• Merger: 21%
• Management buyout: 19%
• Management buy-in: 18%
• Family succession: 17%

Only 27% preferred the traditional private sale. The majority were considering alternatives.

Moreover, the research found:

• 41% of UK SME decision-makers are considering exit in the next 5-10 years
• 17% will certainly exit in that timeframe

This represents hundreds of thousands of UK businesses entering the exit market in the next decade.

The Four Alternative Routes

Let me walk you through four exit routes beyond the traditional trade sale, based on current UK research and tax structures.

Route 1: Management Buyout (MBO)

According to St. James’s Place’s February 2025 analysis:

“A MBO in the UK occurs when a company’s management team acquires the business they operate, typically with the help of external financing. The management team, led by senior executives, takes control of the company, often purchasing shares from the existing owners or investors.”

Best for: Businesses with capable management teams and owners who care about legacy.

Why it works: The team knows the business intimately, reducing buyer risk. Often maintains culture and employees.

Typical trade-off: Lower valuations than trade sales (20-30% less) because management teams can’t pay for strategic synergies.

Route 2: Employee Ownership Trust (EOT)

EOTs have gained significant attention following tax changes.

Historical Background:

When Hillier Hopkins published their January 2025 analysis, EOTs offered 100% relief from capital gains tax on sale proceeds. This made them highly attractive for business succession planning.

Current Tax Treatment (Post-November 2025 Budget):

Following the November 2025 Budget, the tax treatment changed significantly. According to Smith Butler’s January 2026 analysis:

“Following the November 2025 Budget, only 50% of the gain on a qualifying disposal to an EOT is relieved from CGT, with the balance taxed (and not eligible for BADR).”

What This Means in Practice:

• 0% CGT on 50% of your gain
• The remaining 50% is taxed at 24% (standard CGT rate for business assets)
• On a £2 million gain: £500,000 tax (vs £0 under old rules, vs £480,000 standard CGT without EOT)
• Still provides significant tax advantage compared to standard sale
• Business maintains independence
• Trust must hold controlling interest
• Founders can continue working and contribute
• Easier and often quicker sale process than finding external buyer
• (You may qualify for Business Asset Disposal Relief, or Entrepreneurs Relief as at a lower rate up to £1m of gain. Please note this rate is rising every year with the expectation of it equalising with standard CGT in due course.)

Best for: Profitable businesses where owner values culture preservation and team reward, even with reduced tax benefit.

Trade-off: Typically involves extended payment terms (3-7 years from business cash flow) rather than lump sum upfront. Tax treatment less favourable than pre-November 2025, but EOTs remain an attractive succession option.

Oxford Economics data shows there are approximately 4.8 million family-owned businesses in the UK, representing 85% of all private sector businesses. Despite the tax change, many continue exploring EOTs as succession solutions.

Route 3: Private Equity with Rollover Exit

Sell 60-70% to PE firm, retain minority stake, stay involved for growth phase.

Best for: Growth businesses where owner wants to derisk while participating in future upside.

Why it works:

• Initial sale proceeds provide financial security
• Retained stake allows participation in future value creation
• PE brings operational expertise and growth capital
• Potential for “second bite” when PE sells to next buyer

Trade-off: Requires continued involvement for 3-5 years. You’re not walking away; you’re partnering for growth.

Route 4: Lifestyle Exit (Keep, Don’t Sell)

According to multiple valuation experts, many owners overlook this option: don’t sell at all.

Instead:

• Hire a managing director
• Step into chairman role
• Continue taking dividends
• Maintain ownership

Best for: Profitable businesses generating strong cash flow where owner wants income without operational burden.

Why it works:

• Maintains dividend stream
• Removes operational stress
• Can still sell later if circumstances change
• No capital gains tax because you’re not selling

Trade-off: You still own the risk. Business performance still affects your wealth.

The Tax Landscape for 2025-2026

Understanding current tax treatment is crucial for exit planning. According to KPMG’s analysis of the October 2024 Budget:

Current Rates (2025/26):

• CGT on business assets: 24% (increased October 2024)
• Business Asset Disposal Relief (BADR): 14%
• BADR lifetime limit: £1 million of qualifying gains
• BADR rate rising to 18% from April 2026

KPMG notes:

“The increase to capital gains tax and reduction in the benefit of Business Asset Disposal Relief were not as material as expected. However, the rise in employer National Insurance contributions and minimum earnings will intensify the need to maximise cash tax reliefs.”

Smith Butler adds:

“With BADR at 14% in 2025/26 and due to rise again from April 2026, timing alone can move the tax dial. Add in choices about share versus asset sales, valuation and succession options, and it becomes clear why exit planning is part tax review and part business housekeeping.”

The Inheritance Tax Consideration

From April 2026, significant changes to Inheritance Tax (IHT) relief come into effect.

According to KPMG:

“From 6 April 2026, business property relief is expected to change so that 100% relief applies only to the first £1m of qualifying business property, with 50% thereafter. This means that in the event of the unexpected death of a business owner, the next generation will face a significant IHT bill if the company shares pass to them.”

This has led many founders who were planning family succession to reconsider and explore sale options instead.

How to Choose Your Exit Route

According to Strategic Growth for Enterprise’s January 2025 study of 29,965 UK business owners:

When deciding to exit:

• 38% consider family legacy as biggest consideration
• 21% consider future opportunities
• 31% want exit for better work-life balance
• Only 20% want to exit for financial gain
• Only 3% would exit for favourable valuation

This suggests most owners prioritise non-financial factors in exit decisions.

Ask yourself these questions:

1. What matters most to you?

• Maximum price → Trade sale or PE
• Culture preservation → EOT or MBO
• Income without operations → Lifestyle exit
• Continued involvement → PE with rollover

2. What’s your timeline?

• Need money soon → Trade sale
• Can wait 3-7 years → MBO, EOT, or PE
• No specific timeline → Lifestyle exit

3. How do you feel about your team?

• Strong loyalty → EOT or MBO
• Want them to have opportunity → PE or MBO
• Neutral → Trade sale

The Smart Exit Strategy

Research from multiple sources emphasises one key point: don’t commit to a single exit route prematurely.

According to DMO Accountants’ 2024 guide:

“If you are not in a close-down or forced sale situation, there are a variety of exit strategies you could consider… The first three options are fairly self-explanatory. Each will require an arms-length valuation and a negotiated settlement.”

Build a business that would be attractive to multiple buyer types:

• Document systems (appeals to all buyers)
• Develop team capability (crucial for MBO/EOT)
• Reduce owner dependency (increases value across all routes)
• Maintain strong financials (required for all options)

Then when the time comes, you have options. And options create negotiating power.

The business owners who get great exit deals aren’t the ones committed to a single route. They’re the ones who could choose from multiple routes based on timing, terms, and circumstances.

Your Action This Week

Rate these five factors from 1-10 in importance to you:

• Maximum sale price
• Fast transaction (cash in 6-12 months)
• Culture preservation
• Team welfare and opportunity
• Continued involvement vs clean break

Your ratings will reveal which exit route might fit best.

Then research that route specifically. Understand the process, typical timelines, tax implications, and what buyers in that category look for.

The more routes you understand, the better equipped you’ll be to make the right choice when the time comes.

Is your business saleable and exit ready for you to leave it (no matter when it happens)? Click to to get Christine’s free Exit Ready Checklist the expert in making sure your business is saleable for more money and on better terms.   Christine helps you get out of the day-to-day, guides you through the handover of controls and gets you and your businesses exit ready so you can enjoy a happier, richer future.  She saves you THOUSANDS so you can increase the value of your businesses by MILLIONS.