Selling a business as a going concern
When a business is sold as a going concern, it means the business transfers to a new owner as a fully operational entity — ready to trade from day one. The assets, staff, contracts, premises, and customer relationships all move across together, so the buyer can continue running the business without any break in trading.
A going concern business is one that is actively trading, able to meet its financial obligations, and expected to continue operating for the foreseeable future. In short, it is a business that works — it has customers, it generates revenue, and there is no immediate threat to its survival. That is what makes it sellable as a going concern.
If you are exploring a sale, understanding what going concern means — and what it means for your sale price, your buyers, and your preparation — is a useful starting point.
What is included in a going concern sale?
A going concern sale transfers the business as a whole, rather than simply as a collection of assets.
That typically includes:
- Physical assets such as equipment, machinery, vehicles, and stock
- The premises — either through a freehold transfer or an assignment of the lease
- Staff, who transfer to the new owner under TUPE regulations
- Existing contracts with customers and suppliers
- Goodwill — the value attached to the business’s reputation, customer relationships, and trading history
- Any intellectual property, such as trademarks or processes
The exact assets included will depend on what is agreed during negotiations, but the principle is the same: the buyer is acquiring a working business.
Does ‘going concern’ mean there is a problem with the business?
No. The phrase is sometimes associated with financial difficulty in other contexts — but in a business sale, it carries no negative meaning, it simply describes how the sale is structured.
When a business is listed for sale as a going concern, it means the buyer is being offered a live, operational business. That is a positive thing. It is the default description for the vast majority of business sales on the market.
A going concern sale keeps the business alive under new ownership, rather than liquidating the business when it is no longer required.
What do buyers look for in a going concern?
Buyers assessing a going concern want confidence that the business will continue to perform after the handover — that the revenue, the staff, the customer relationships, and the day-to-day operations will remain intact once ownership changes hands. The areas they typically focus on are:
- A clear and consistent trading history — ideally three or more years of accounts
- Stable or growing revenue, with no over-reliance on a single customer or contract
- Positive cash flow and a manageable level of debt
- Contracts, leases, and supplier agreements that can be transferred to a new owner
- A team capable of continuing to operate without the current owner’s day-to-day involvement
If the business is heavily dependent on you personally — your relationships, your expertise, or your name — buyers will factor that into their offer. It does not prevent a going concern sale, but it is worth thinking about before you go to market. A structured handover period, where you remain available to introduce the buyer to key contacts and support the transition, can help address this concern and protect the value of the sale.
Preparing your business for a going concern sale
The stronger your business looks as a going concern, the better your negotiating position. That preparation does not need to start the moment you decide to sell — in fact, the earlier you begin, the more options you have.
Before you go to market, it is worth making sure your accounts are up to date and clearly presented, that key contracts are in writing and transferable to a new owner, and that the business is not wholly dependent on your personal involvement. Buyers will scrutinise all three areas during due diligence, so addressing them early reduces the risk of issues arising later in the sale process.
A business sale agent can carry out a business valuation to give you an honest picture of what your business is likely to achieve as a going concern and highlight anything that might affect the price or attract buyer scrutiny during due diligence.
How Selling My Business can help
With over 60 years’ experience and more than 10,000 businesses sold, we know what buyers are looking for in a going concern.
We can carry out a business valuation to give you a realistic picture of what your business is likely to achieve as a going concern, identify anything that could affect its value or appeal to buyers, and guide you through the sale process from that first conversation through to completion. Our network of nationwide offices means you will have an adviser with local market knowledge and national reach.
If you are thinking about selling, get in touch with a member of the team for a no-obligation conversation about what a going concern sale could look like for you.
