Business Asset Disposal Relief

The planned method by which founders or investors intend to realise the value of their investment. Common exit routes include trade sale (acquisition), IPO, secondary sale, or management buyout.

The sale of a company to a strategic buyer, typically another company in the same or adjacent industry. Trade sales are the most common exit route for venture-backed and private equity-backed businesses and often command premium valuations due to strategic synergies.

A portion of the purchase price in an acquisition that is payable at a future date, either as a fixed amount or contingent on the achievement of specified milestones. Deferred consideration must be recognised at fair value at the acquisition date under IFRS 3 and ASC 805, with subsequent changes in value typically recorded through profit or loss.

A transaction in which a company's existing management team acquires the business, often with financial backing from private equity or debt providers. MBOs are a common succession and exit route, particularly for founder-led or family-owned businesses.

Reverse due diligence is diligence a seller, or the management team of a target, carries out on the buyer. In any deal where the seller retains an ongoing interest — an earn-out, a rollover of equity into the enlarged group, or a management team joining a private-equity platform — the buyer's quality matters as much to the seller as the reverse.

A private equity transaction in which one PE fund sells a portfolio company to another PE fund, rather than to a strategic buyer or through an IPO. Secondary buyouts have become the most common PE exit route, accounting for over 50% of European PE exits in recent years.

A transaction in which existing shareholders sell their equity to new investors rather than the company issuing new shares. Secondary sales provide liquidity to founders and early investors without diluting other shareholders or changing the company's capitalisation.

A vendor loan note (also called vendor finance or a deferred loan note) is an arrangement in which the seller of a business lends part of the purchase price back to the buyer, to be repaid over time with interest. Instead of receiving the whole price in cash at completion, the seller takes a loan note for a portion of it, which the buyer pays down from the acquired business's cash flow.

Business Asset Disposal Relief: CGT When Selling a Business

The current rate, the conditions, the £1m lifetime limit and worked capital gains tax figures.

Share Sale vs Asset Sale: Structure and Tax (UK)

How deal structure affects BADR and your after-tax proceeds.

Contingent Liability

A potential obligation arising from past events whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the entity's control, or a present obligation where payment is not probable or the amount cannot be reliably measured.

How much does it cost to sell a business?

Expect adviser or broker fees, legal fees and, often, tax on the gain. Fees vary widely by deal size and complexity; larger deals typically pay a corporate finance adviser a success fee plus legal costs.

What is Business Asset Disposal Relief?

Business Asset Disposal Relief (BADR), formerly Entrepreneurs' Relief, is a UK capital gains tax relief that reduces the CGT rate on qualifying gains when you sell a trading business, up to a lifetime limit, subject to conditions.

What is the difference between a share sale and an asset sale?

In a share sale the buyer acquires the company itself, including its liabilities; in an asset sale the buyer acquires specified assets and leaves most liabilities behind. The choice has major tax and risk consequences.