If you're thinking about selling your business, here's what you should do before you call a broker

When most business owners begin thinking about exit, the instinct is to reach for a corporate finance advisor, commission a valuation, and begin the process of finding a buyer. This is understandable - it is what the industry is designed to produce. But it is not the only path available, and often for most SME owners, it is not always the best one.

Research from the Exit Planning Institute found that 70% of business owners, when asked to express a preference, favoured internal transfers over external sales as their exit route. Only 17% actively preferred an external sale. The gap between stated preference and actual behaviour is almost entirely explained by one thing: most owners don't know how to structure an internal transition - so they default to what they do know.

• 70% of UK business owners prefer an internal transfer as their exit route (Exit Planning Institute, 2023)

• Only 17% actively prefer selling to an external third party

• Approximately 60% of businesses placed on the open market never actually sell

• Employee ownership removes the dependency on finding an external buyer entirely

What Selling to Your Employees Actually Involves

Before the legal and financial structure, there are three things worth looking at first: the readiness of the business, the values that run through it, and the strength of the leadership team already in place.

A business that has a clear sense of what it stands for, a leadership team that understands and shares those values, and people who are ready to step up - is a business that is well-placed for this kind of transition. No one needs prior ownership experience. What matters is the drive, the alignment and the willingness to lead.

With the right platform and support, the transition itself can move quickly. For businesses that are ready, it can be completed in a matter of weeks - not the years most owners assume.

Why the Outcomes Are Different

More than half of UK business owners are planning to sell part or all of their shareholdings over the next ten years. Many will find the external sale market more challenging than anticipated - longer timelines, more abortive processes, and buyers who restructure operations post-completion in ways sellers hadn't envisioned.

Research by Brookings Institution compared outcomes across every major business transition model - trade sales, private equity acquisitions, family handovers, and employee ownership transitions - and found that employees are significantly more likely to remain employed and satisfied in companies that transition through employee ownership than through any other model. The same research recommended legislative support for employee ownership on the strength of its outcomes across retention, satisfaction, and financial security.

For the selling owner, this resilience matters directly. A stable, motivated workforce during and after transition protects the ongoing value of deferred consideration payments - which are often funded by future business performance.

Is Your Business a Candidate?

Employee ownership works best for SMEs who value their employees and culture, have a competent management team already in place and a steady, consistent cash flow.

• Any UK trading SME with four or more employees can explore Employee Ownership

• Best suited to businesses with between 10 and 250 employees

• Consistent profitability is the key financial requirement - not turnover or sector

• In early 2021, EOTs represented 1 in 20 of all private company sales in the UK

• Professional services, engineering, manufacturing, and tech companies are all well-represented

The Practical First Step

Before anything else, the most useful exercise is an honest look at your business: are the values clear and shared, is there a leadership team with the capability and the drive to take this forward, and is the business in steady enough shape to support the transition?

If the answer to those questions is broadly yes, the next step is understanding what your specific path could look like. Valloop's Employee Ownership Charter is built to help business owners and their leadership teams do exactly that - mapping out what an ownership transition could mean for the business, the people, and the owner's exit, in a way that is clear and straightforward.

Selling to your employees is not a consolation exit. For the right business, it is the most commercially rational decision available.