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We have significant experience in the automotive and transportation sector

How to sell an Automotive Business

Before the process of selling your automotive business begins, you should consider the main objectives for sale, and the goals you wish to achieve. Developing an exit strategy early on also gives you time to research the market, and better understand what buyers are looking for.

With the help of professional advisors, and possibly a business broker, information can be distributed to potential a buyer that presents your business in the best light. But what industry challenges might you be facing?

Regulatory requirements

In the drive to cut CO2 emissions and meet strict European targets, the industry has to continually invest in new technologies, and move towards the development of advanced electric vehicles.


Automotive companies face considerable uncertainty as we leave the EU. Failing to successfully negotiate a free-trade deal with Europe could adversely affect ongoing investment in the UK automotive industry, as well as the recruitment and retention of workers from EU member states.

Lack of skilled workers

The industry is facing a skills shortage despite the significant investment already made in training and apprenticeships. The introduction and development of new technologies has also introduced a need for further training of existing staff.

Social media

Car buyers are using social media to gather information, read reviews, and make purchase decisions. Many automotive businesses have had to move away from their traditional advertising campaigns and product launches, to engage with customers on an ongoing basis via social media channels.

Presenting your business to potential buyers

Prepare in advance

To present your business in the best light, you need to make sure that your systems are working efficiently, and that management information is readily available.

Your buyer will be looking for cash flow stability, profitability, and an indication of customer satisfaction, so good credit control and management of stock is crucial to demonstrate that the business has solid foundations.

Sales Memorandum

Within the sales memorandum, you need to include:

  • Financial information such as historic profit and loss statements, profit and revenue forecasts, asset valuations, and details of all existing and contingent liabilities
  • Legal details of staff and supplier contracts
  • General information on why you are selling the business, how it works on a day-to-day basis, your customer base, and how profits are derived

You may need professional assistance to put together the sales memorandum, also known as an information memorandum, but you should avoid providing detailed financial information at this point.

A business broker with previous practical experience in the automotive industry can advise on what to include, and will also be able to negotiate with potential buyers on your behalf.

Finding a buyer

Once you or your broker has identified potential purchasers, the sales memorandum can be distributed, along with a projected timetable for the sale and a request for any opening offers.

You can then narrow down a shortlist of buyers, using their current financial situation and likelihood of being able to meet your terms. Once you have negotiated to a more advanced stage, a particular buyer may stand out from the others, at which point a Heads of Term agreement can be considered.

Heads of Term agreement

A detailed Heads of Term agreement is signed following in-depth negotiations with your chosen party, and this precedes a period of due diligence by the prospective buyer. They will want to ensure the information you have provided is accurate and reliable, and amongst other activities, will scrutinise your accounts, talk to some of your staff, and confirm which assets are wholly owned by the company.

Sales Agreement

The sales agreement marks the final step in the sale of your business. It is a detailed document that may include warranties or indemnities if your buyer is concerned about how the business will perform following the sale. 

It is crucial that your legal advisor confirms the requirements for these prior to signing. They could involve you in a future claim for compensation if the information you have given is later found to be inaccurate.

Your buyer may also request and ‘earn out’ agreement whereby you remain in the business for a pre-agreed length of time, usually on a consultancy basis, and receive staged payments in addition to a reduced initial lump sum.

Selling My Business can help if you are trying to sell your automotive business. Our industry experts understand the challenges you face having advised numerous business people within the sector. Call one of our experts to arrange a free same-day consultation.

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