Selling a Business: 7 Most-Asked Legal Questions Answered in Plain English

Selling a business is often one of the biggest commercial decisions an owner will make. The language used by lawyers and advisers can feel impenetrable just when the stakes are highest. 

This guide answers the questions business owners ask most when preparing to sell, with each one explained in plain English and grounded in current practice for England and Wales. 

The aim is to demystify the process and help you ask the right questions, not to replace tailored legal advice.

1.”What’s the difference between selling shares and selling assets?”

This is one of the first questions sellers usually face.

A share sale means you sell the company itself; the buyer takes the whole entity, including all its history, contracts, and liabilities. An asset sale means the company sells individual parts (premises, equipment, goodwill, stock) while you keep the legal shell behind. 

Sellers usually prefer share sales because they make a cleaner exit and, with appropriate tax advice and depending on their circumstances, may be able to structure the deal more tax-efficiently, whereas buyers frequently prefer asset deals because they can leave unwanted liabilities behind.

2.”I want to leave, but the buyer wants me to stay on for a while, what should I consider?”

This is extremely common, because buyers worry the business depends too heavily on you. 

The arrangement should be put in writing, even if relations are friendly. Even what seem like the simplest points are best set out in writing early in the negotiations so that everyone understands what is intended for the future relationship. 

The parties should agree the length of the handover, whether you will remain as an employee, consultant or director, what you will be paid, your expected hours, and your duties.

A vague or informal understanding is risky. A short written consultancy or service agreement protects both sides by defining exactly what “staying on a bit” means in terms of real time, remuneration, and responsibilities.

3.”What is a restrictive covenant and will I have to sign one?”

A restrictive covenant is a contractual promise restricting what you can do after completion. Typically, in a business sale, this would be not to set up or join a competing business, poach staff, or approach customers for a defined period after the sale. 

In England and Wales, these are only enforceable if they go no further than is reasonable to protect a legitimate business interest, such as the goodwill the buyer has just paid for. Courts may accept wider and longer restrictions in a business sale than in an ordinary employment contract, because the buyer is protecting the goodwill and value it has purchased. However, a covenant can still be unenforceable if it goes further than reasonably necessary, whether because of its scope, geographical reach or duration.

4.”How long does the whole process take?”

Owners consistently underestimate this. Finding a buyer can take many months, but once a buyer is committed and signs a letter of intent, the due diligence and contract phase often runs for around two to four months, depending on the complexity of the business and the buyer’s due diligence process. 

Being sale-ready, for example with clean accounts and documents organised in advance, is a big factor in speeding things up and building early momentum as a seller.

5.”What are warranties in a sale agreement?”

Warranties are formal statements you make confirming things about the business are as described. For example, that the accounts are accurate or that there is no hidden litigation. 

If a warranty later turns out to be untrue, the buyer can claim compensation from you, so they carry real financial risk. 

You protect yourself through a disclosure letter, which sets out anything that qualifies a warranty; if properly disclosed in line with the sale agreement, the buyer will usually be prevented from bringing a warranty claim about that issue.

6.”Broker, M&A adviser, accountant or solicitor: who do I need to sell my business?”

These four roles are frequently confused, but each does a distinct job. 

A broker or M&A adviser finds buyers, markets the business, and helps negotiate the price and deal structure, while an accountant prepares your figures, advises on tax efficiency, and helps prepare the business for buyer scrutiny. A solicitor then handles the legal contracts, due diligence, and the mechanics of completion. 

For most SME sales you will want a team working together, and when choosing any adviser, it is worth asking who will lead your matter, how their fees are structured, and what their track record is in deals like yours.

7.”How do I stop staff, customers or competitors finding out I’m selling?”

Confidentiality is one of the biggest worries for sellers, because news of a sale can unsettle employees, customers, and suppliers before anything is even agreed.

A standard protection is a non-disclosure agreement (also called a confidentiality agreement), which a buyer signs before you share any sensitive information about the business. It contractually commits them to keep the information confidential and use it only for assessing the proposed transaction.

In practice you also control the flow of information in stages, releasing the most sensitive material (such as key contracts or customer lists) only once a buyer has shown they are serious and the deal is progressing.

Even with these protections in place, it is sensible to plan early how and when you will tell your team, so that you stay in control of the message rather than reacting to rumour.

Key takeaway

Selling a business is much easier to manage when you prepare early, understand the difference between the main deal structures, take advice before key terms are agreed, and control the flow of confidential information carefully. Getting these points right can make the sale process smoother, reduce avoidable risk, and help protect the value you have built.

How JLN Can Help You

Selling a business is not just a transaction; it is a process that requires careful planning, clear documentation and strategic thinking. The difference between a well-managed sale and a poorly structured one can be significant, both financially and in terms of risk.

At JLN, we work closely with business owners to:

• Structure transactions in a way that aligns with your financial and personal objectives
• Identify and mitigate legal and commercial risks before they impact negotiations or value
• Negotiate sale terms, warranties, restrictive covenants and handover arrangements that protect you both at completion and in the years that follow
• Coordinate with accountants, brokers, M&A advisers and other professionals to ensure a cohesive approach
• Help you manage confidentiality, due diligence and disclosure throughout the sale process

Early legal advice is not an additional cost; it is an investment in securing the best possible outcome from your sale.

Speak to JLN Before You Proceed

If you are considering selling your business, or have already begun discussions with a potential buyer, it is important to seek advice before key terms are agreed. 

Decisions made at the early stages of a deal, including whether the sale is structured as a share sale or asset sale, what warranties are given, and whether you remain involved after completion, can have lasting financial and legal consequences.

Contact JLN today to discuss your situation in confidence. We can help you understand the legal process of selling your business, avoid common pitfalls, and ensure that the value you have built is properly protected when it matters most.

Contact Us

We will respond to most enquiries with both an indicative scope of work and a fee estimate, as well as the offer of a complimentary 20-minute discovery video call to discuss your issues and how we can help, before sending a more considered formal fee estimate via email.

In some limited cases, if you would just like initial advice and guidance on a call, we may instead offer a fixed fee appointment (commonly charged between £280 and £500 + VAT) whereby we will review the information you provide, hold a video call consultation and then follow up with an advisory email (as well as a fee estimate for any further work identified)

Please email wewillhelp@jonathanlea.net or call us on 01444 708640 as a first step. We first need an overview of the background and your issues, together with any significant documents, to provide an indicative scope of work and fee estimate. 

 

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This article is intended for general information only, applies to the law at the time of publication, is not specific to the facts of your case and is not intended to be a replacement for legal advice. It is recommended that specific professional advice is sought before relying on any of the information given. © Jonathan Lea Limited.