Exiting your business is a big moment. It usually marks the end of a long journey, building your startup from the early days to a strong growing business. It’s exciting but can also feel daunting – after all your hard work, you don’t want to get it wrong in the final stages! Many founders get caught out by the legal side of selling their business because they leave it too late. If you want a smooth exit and the best outcome for you and your investors, it is important to get the right business exit legal advice early on.
Focused For Business’ Funding Accelerator mentor, Sarah-Jane Butler from Farringford Legal, recently shared straightforward advice about preparing your business for exit with our Funding Mastermind community.
When is the Right Time to Start Preparing for Exit?
The most important starting point is: don’t leave your exit plan until the last minute. If you wait until you are ready to sell before sorting out legal paperwork, it will cost you time and money.
Early preparation helps you:
- Get a better price because buyers trust a well-prepared business.
- Understand your goals clearly and plan your exit on your terms.
- Fix any legal or operational issues before buyers start asking questions.
As Sarah-Jane put it, “If you leave your legal checks and paperwork to the last minute, you’re playing catch-up — and that almost always costs you.”
How do I Pick the Right Legal Advisors?
Not all lawyers have experience with business sales. Choosing the wrong one can cause delays and extra costs.
Look for:
- Lawyers who specialise in business sales and understand Sale and Purchase Agreements well.
- Advisors who explain things clearly without jargon.
- Legal teams who are happy to give you a fixed fee quote so you know what you will pay.
If you don’t have a trusted lawyer with this experience, ask for recommendations or look for firms that focus on business sales.
What Can I Do to Understand and Manage Legal Fees When Exiting My Startup?
Legal fees can be a shock if you are not prepared. Sarah-Jane advises asking for a fixed fee upfront rather than paying by the hour. That way you can budget and avoid surprises.
Here’s a rough guide to what legal fees might look like:
- Small sales under £500,000 could cost £5,000 to £7,000.
- Bigger deals, say £6 million, could be around £20,000 or more depending on how complex the sale is.
Fee structures vary. Some firms charge a percentage of the deal value, often around 10 per cent, but others, like Sarah-Jane’s, charge closer to 5 per cent. Always check and agree fees in writing before you commit.
What Happens During the Sale Process?
Knowing what to expect will help you stay calm and in control. The key stages are:
- Letter of Intent (LOI): This is where the buyer makes an initial offer and you agree the main terms.
- Due Diligence: The buyer investigates your business in detail, including legal and financial checks.
- Sale and Purchase Agreement (SPA): The legal contract that sets out the final terms of the sale. This is often the most complex document.
- Completion: This is the day ownership and money change hands.
Sarah-Jane warns that the SPA is a key document where specialist legal advice is essential to protect your interests.
How to Prepare Yourself Mentally and Practically to Exit Your Startup
Exiting your business is not just about legal and financial issues. It can be emotional too.
Sarah-Jane advises founders to:
- Stay flexible and open during negotiations.
- Build a trusted team of advisors — legal, financial and business mentors.
- Keep communication clear and honest with buyers.
Remember, this is your legacy. Take time to prepare so you can leave on your own terms.
Final Thoughts
Don’t leave your exit to chance. Getting clear, specialist business exit legal advice early can save you money and stress. Choose experienced advisors, take time to understand and negotiate legal fees and prepare yourself both practically and mentally.Sarah-Jane Butler is one of over seventy expert mentors who support Focused For Business’ Funding Accelerator programme. Preparing your startup for exit is a key part of preparing to raise investment. If you want help developing an exit strategy for your startup in order to secure funding, find out more about the Funding Accelerator programme at a free, online Funding Strategy Workshop. Book your place here
When is the best time to start preparing my startup for exit?
The best time to start preparing is at least one to two years before you plan to sell. Early exit planning helps you fix legal issues, streamline operations, and increase the value buyers are willing to pay.
What legal advice do I need when selling my business?
You need a lawyer who specialises in business sales. They should have experience with Sale and Purchase Agreements (SPAs), explain terms in plain English, and offer a clear fee structure so you know what to expect.
How much do legal fees cost when exiting a startup?
Legal fees depend on the size of your deal. Smaller sales under £500,000 may cost £5,000–£7,000, while deals worth £6 million or more could cost upwards of £20,000. Always ask for a fixed fee quote to avoid unexpected costs.
What are the steps in selling a business?
The main steps in a business sale are:
Letter of Intent (LOI) – agreeing headline terms.
Due diligence – the buyer reviews your finances and contracts.
Sale and Purchase Agreement (SPA) – the final legal contract.
Completion – transferring ownership and funds.
How do I prepare myself emotionally for selling my business?
Selling a startup can be emotional as well as financial. To prepare, build a trusted team of legal and financial advisors, stay flexible in negotiations, and focus on your long-term goals for life after the sale.
Why is an exit strategy important for raising investment?
Investors want to know how they’ll see a return. Having a clear exit strategy makes your startup more attractive because it shows you’re planning for growth, value, and eventual return on investment.
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