Insight: Deal-ready isn't the same as sale-ready
How pre-sale restructuring increases business value and reduces deal risk
Produced in collaboration with accounting firm UHY Williamson Croft, this is the first in a series of deep-insight articles focusing on pre-sale restructuring, deal-breaking tax risks, and the role of accountancy throughout a transaction process.
Deal-ready isn't the same as sale-ready
When it comes to considering the sale of a business, many businesses feel they perform well operationally, but more often than not fail to maximise value due to the complexity of their business structure.
This is hugely off-putting to potential buyers, who don’t just acquire profits - they acquire risk.
A business may be performing well, but if its legal, tax or group structure is complex or opaque, buyers will either:
- Reduce the price.
- Introduce extensive warranties and indemnities, or
- Walk away entirely.
Restructuring therefore is a driver of value – not just a compliance exercise.
What buyers are looking for
Alongside a buoyant bottom line, buyers are looking for:
- Clean group structures.
- Transparent ownership.
- Isolated risk.
Without these, you’re risking the whole deal, incurring unnecessary expense, time and emotional investment.
What the stats show
A significant proportion of announced M & A deals do not complete without adjustment, delay, or even worse, failure.
According to a recent UK survey, nearly half of organisations have delayed M&A deals due to insufficient preparation and heightened scrutiny in due diligence, while almost half adjusted their financial modelling in response to uncertainty around structural readiness.
H1 2025 saw M&A volumes down by 19%, with a staggering 97% of UK organisations unprepared for major deals, despite half of those having prioritised M& A or strategic partnerships as part of their growth strategy.
A lack of resource and financial uncertainty were cited as the biggest barriers to success which lead to deal delays.
Common structural issues that reduce business value
Issue: Overly complex group structures (i.e. historic entities, dormant companies, circular ownership).
Impact: Increases due-diligence time, cost and negatively impacts buyer confidence.
Issue: Multiple or unclear share classes (i.e. preference shares, growth shares or alphabet shares).
Impact: Creates the impression of misalignment between economic and voting rights.
Issue: Non-core or high risk assets in the trading entity (i.e. property, IP, legacy contracts and historic claims.
Impact: The buyers may want to discount for unknown or unquantified risk.
Issue: Legacy tax and legal issues.
Impact: Faced with uncertainty, buyers often apply a uncertainty, buyers often apply a risk discount, lowering the offer price to reflect potential future costs.
Practical examples of value-enhancing restructuring
With higher interest rates and increased scrutiny from investors and lenders, buyers are spending more time and money on due diligence. As a result, they increasingly favour businesses that are:
- Easy to understand.
- Easy to separate.
- Easy to integrate.
A clean structure reduces uncertainty - and uncertainty is routinely priced into deal multiples.
Here’s some steps to take with estimated timelines:
Steps to take: Group Simplification
How and why?
Remove dormant or redundant entities to clarify exactly what the buyer is acquiring and to reduce perceived risk.
Timeline: 12-24 months before sale.
Buyers like to see a track record of trading within the simplified group. Doing this too close to sale can raise suspicion that issues are being “hidden” or artificially simplified.
Steps to take: Hive-down or hive-off of trading activities
How and why?
Separate the core trade from legacy assets or liabilities to create a clean sale vehicle.
Timeline:
8–36 months before sale.
Hive-downs often involve legal, tax, and regulatory approvals. Completing them early gives time for:
- Demonstrating clean trading history in the new entity
- Avoiding last-minute complications during due diligence
Steps to take: Share capital reorganisation
How and why?
Align share classes and simplify ownership to minimise disputes and delays during completion.
Timeline: 12–18 months before sale.
Early reorganisation:
- Reduces shareholder disputes
- Allows any minority buyouts or share adjustments to settle before sale
- Gives time to demonstrate smooth governance to buyers
Steps to take: Asset separation
How and why?
Move property, IP or investments into separate entities to protect value and improve tax efficiency.
Timeline: 12–24 months before sale
- Ensures clarity over what the buyer is purchasing
- Allows historic financials of the core trading entity to be clean
- Provides tax planning opportunities without rushed transactions
Steps to take: Balance sheet clean-up
How and why?
Resolve intercompany balances, dividends and historic issues before sale to strengthen negotiating position.
Timeline: 6-12 months before sale.
- A final clean-up can be done closer to sale since it’s mostly accounting and internal adjustment work
- Buyers like to see a tidy balance sheet at signing, minimising post-sale disputes
Clearly, time is of the essence.
Other actions business owners can take to become an appealing purchase
The more “future-proof” and transparent a business appears to a buyer, the less risk they perceive, and the higher the valuation. Structural changes alone are important, but operational, legal, commercial, and financial readiness often move the needle on multiples as much as balance sheet clean-up.
Consider:
- Operational and governance actions (strong management team, succession planning, formalised, strong processes and policies, IT and data readiness i.e. a legacy IT systems are often a red flag due to costly upgrades or migration)
- Commercial/customer actions (a diverse customer base, avoid the 80/20 rule, secure long-term contracts, IP protection)
- Financial/reporting actions (clear up historic debt, standardise accounting and reporting, tax planning and efficiency through capital allowances, VAT structures)
- Legal and compliance actions (ensure contracts are assignable on sale, resolve historic litigation, compliance with GDPR)
Strategic/market positioning actions (prepare management packs, teaser documents, identify potential deal breakers and buyer objections, public facing brand is in order)
If you have questions regarding any stage of the deal process, from company restructuring, through to financial due diligence, reach out today for an initial confidential call to discuss your options.
This article provides general information and shouldn't be relied upon as specific tax advice for your circumstances.
Tax rules change regularly, and individual situations vary. Always consult qualified advisers about your specific transaction.
This article contains links to third-party sources.
We do not control these websites and are not responsible for their content.
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