The difference between a good exit and a great one is rarely decided at the negotiating table. It's decided in the two years before — in the accounts, the structure and the reliefs. Here is what that preparation is actually worth, in pounds.
Guide · Updated August 2026
Buyers pay for clean, believable, transferable profit. Improvements you make now — documented associate arrangements, a cost base without personal spending threaded through it, income less dependent on you personally — need time to show up in the accounts a buyer will actually weigh. Most buyers look at three years and weight the most recent most heavily, so a change made this quarter does not become price until it has lived through a full set of accounts and been repeated.
Start three months out and you are selling the practice as it is, take it or leave it. Start two years out and every pound of sustainable profit improvement multiplies into several pounds of price.
Illustrative. A practice with fee income of £1,200,000 and adjusted EBITDA of £216,000. Its staff cost ratio has drifted to 31% of fee income — £372,000. Over two years the owner re-cuts the rota, fills a nurse vacancy rather than covering it with agency, and lets pay rises track fee growth instead of outrunning it. The ratio comes back to 28%, or £336,000.
That is £36,000 a year of additional sustainable profit, taking EBITDA to £252,000. On an illustrative 6× multiple, the price moves from £1,296,000 to £1,512,000 — £216,000 more. After Business Asset Disposal Relief at 18%, that is £177,120 in the owner's hand, for a change that cost nothing but attention and had to be made two years early to count.
The multiple does the work, which is why margin discipline before a sale pays several times over and discounting to chase turnover does not. Our benchmarks guide sets out the ratios worth tracking and how to build them, and the valuation guide covers what moves the multiple itself.
Business Asset Disposal Relief reduces capital gains tax on qualifying gains up to a £1 million lifetime limit. The rate has moved twice in two years, and both moves went the same way:
Against a main CGT rate of 24%, the relief is now worth £60,000 per qualifying shareholder rather than the £140,000 it was worth two years ago. It is still very much worth having — but it is no longer large enough to rescue a badly structured deal, and the shrinking gap makes the second lever below more important, not less.
Worked example — illustrative. A practice company sold for £1,400,000 on shares subscribed for £100. The gain is £1,399,900; after the £3,000 annual exempt amount, £1,396,900 is chargeable. The first £1,000,000 is taxed at 18% (£180,000) and the balance of £396,900 at 24% (£95,256) — total CGT £275,256. Without the relief the whole £1,396,900 would be taxed at 24%: £335,256.
If you trade as a company you will usually want to sell shares: one capital gain, taxed on you, with BADR potentially available. Buyers often prefer to buy assets, because they take on none of the company's history and get a cleaner risk position. The two routes produce very different outcomes for you.
An asset sale puts the gain inside the company, where it is taxed at corporation tax rates of up to 25%, and then you still have to extract the proceeds — as a dividend at up to 39.35%, or through a members' voluntary liquidation. Two layers of tax on the same money, against one on a share sale. That gap can run well into six figures, which makes it a pricing point rather than a technicality: if the buyer wants the cleaner structure, the buyer should pay for it. Model both after-tax outcomes before heads of terms are signed, not after.
The mechanics differ too. Stamp duty on a share purchase is 0.5% of the consideration, payable by the buyer, on transfers over £1,000 — on a £1.4m deal, £7,000. An asset deal instead brings SDLT on any property, and the sale of a going concern needs to meet the transfer of a going concern conditions if VAT is not to be charged on it.
Groups are professional acquirers with standard playbooks: part of the price deferred or contingent on performance, the seller tied in clinically for several years, targets that determine the earn-out. None of that is inherently bad — but the detail decides whether the headline price is real. What exactly triggers the deferred payments? What can you still control once you are an employee-ish clinician in your old practice? Our article on what to negotiate at heads of terms goes through the clauses that matter.
The tax treatment is where sellers get genuinely caught out, because it does not follow the cash.
That last point is the expensive one, and it is decided by drafting. An earn-out framed as consideration for shares and one framed as a retention bonus can feel identical across the table and differ by twenty-seven points of tax.
Deadlines coming up, rule changes that affect dentists, and one number worth checking — once a month, no spam.
Two to three years. Buyers typically look at three years of accounts and weight the most recent most heavily, so a change made this quarter does not become price until it has lived through a full set of accounts and been repeated. Two years is also the qualifying period for Business Asset Disposal Relief, so it is the point at which share structure and officer status can still be fixed. On an illustrative practice with £1.2m of fee income, bringing the staff ratio from 31% to 28% adds £36,000 of profit and, at a 6× multiple, £216,000 of price.
It reduces capital gains tax to 18% on qualifying gains up to a £1 million lifetime limit, against a main rate of 24% — a saving of £60,000 per qualifying shareholder. The rate has risen twice: it was 10% up to 5 April 2025 and 14% for 2025/26, so the same £1m of gain that cost £100,000 two years ago now costs £180,000. Because the limit is per person rather than per company, a genuinely involved spouse holding qualifying shares can double the saving to £120,000 — provided the conditions were met for the full two years before completion.
Often it is unavoidable, so the question is how it is structured rather than whether to have one. Test whether the targets are achievable and genuinely within your control once you are no longer the owner. Then check the tax: an unascertainable earn-out creates a separate chargeable asset valued and taxed at completion, and the later payment is a second disposal that usually cannot claim Business Asset Disposal Relief. Worst of all, a payment conditional on you continuing to work can be recharacterised as employment income, taxed at up to 45% plus National Insurance rather than 18%.
For you, almost always the shares. A share sale produces one capital gain in your hands with Business Asset Disposal Relief potentially available at 18%. An asset sale puts the gain inside the company, where it meets corporation tax of up to 25%, and you then still have to extract the proceeds — as a dividend at up to 39.35% or through a liquidation. That is two layers of tax on the same money. Buyers prefer assets because they inherit none of the company's history, so treat their preference as a price negotiation rather than a technical detail.
With a corporate buyer, usually yes — a clinical tie-in of two to five years is standard, and the deferred element of the price often depends on it. That is not automatically a bad deal, but it changes what you are actually agreeing to: you become a clinician in a practice someone else runs, with targets set by them and a chunk of your sale price riding on them. Model your income and your day-to-day authority across the whole tie-in period before signing, and be clear which payments depend on performance and which on your continued presence.
A free, no-obligation conversation about your situation — associate, principal, buying or selling. If we can't add value, we'll say so.
One short email a month: deadlines coming up, rule changes that affect dentists, and one number worth checking in your practice. No spam, unsubscribe any time.