Selling your business when you retire: Everything you need to know

When is the right time to sell a business on retirement?

The right time to start preparing the sale of your business is several years before the date on which you want to retire. This timeframe allows you to increase the value of the business, put the documentation in order and find the right buyer without rushing and without pressures that work against you.

If you are reading this, you have probably been mulling the idea over for months — or years. That is normal. After decades building your business in the Valencian Community (Comunidad Valenciana), the decision to sell and retire is not taken lightly. But, as a general rule, owners who plan ahead get better results in every respect: a better price, a better transition and, above all, greater personal peace of mind.

The question affects many businesses: the Valencian Community has more than 372,000 active companies (INE, DIRCE as at 1 January 2025), and every year some of their owners reach retirement age and need a successor.

Two illustrative examples: the difference between planning and not planning

To understand why timing matters so much, let us look at two illustrative examples, with fictitious business owners from the L'Horta district (comarca), in Valencia.

Illustrative example: Miguel, two years of preparation

Imagine that Miguel runs a technical services company with 12 employees and a stable turnover of approximately €1.5 million a year. At 62 he decides that he wants to retire at 65 and starts preparing straight away.

Over the following two years, Miguel does three fundamental things:

1. He reduces his operational role. He delegates day-to-day management to his operations manager, trains a salesperson to take over the relationships with the main clients and documents the processes that only he knows.
2. He puts the accounts in order. He separates personal expenses from business expenses, regularises the situation of some assets and presents three clean and consistent financial years.
3. He starts the sale process in good time. He contacts an M&A adviser one year before his target retirement date.

The possible result: Miguel could sell his company in 8 months to a business group in the sector that is looking to expand in Valencia, at a price that exceeds his initial expectations, because the company runs autonomously and has a diversified client base. He could retire at 65, as he had planned, with a transition period of 6 months that allows him to say goodbye to clients and employees calmly.

Illustrative example: Antonio, urgency as the enemy

Antonio has a similar company — technical services, 9 employees, comparable turnover. But at 66 he still has not seriously considered selling. If a health problem forces him to cut back his activity, he will have to speed up the process.

The problem is that Antonio is the company. All the important clients have his mobile number. He is the one who prepares the quotes, approves the payments and solves the most complex technical problems. There are no trained middle managers and no documented processes.

Potential buyers would identify the risk: if Antonio leaves, a good part of the turnover will leave with him. The offers would reflect that discount. Antonio might end up selling, but at a price significantly lower than he could obtain with preparation, and on less favourable terms.

The difference between the two cases would not lie in the quality of the company, the sector or the location, but in the preparation time.

The 5 steps to selling your business and retiring well

Step 1: Know the value of your business (as soon as possible)

You cannot plan your retirement without knowing how much money you will get from the sale. You need a realistic estimate, not the figure you "feel" your business is worth or what a friend told you over lunch.

Our free valuation tool gives you an indicative range based on your sector, turnover and profit. It is a good starting point. For a more precise valuation, you will need a professional analysis that takes into account qualitative factors such as dependence on the owner, the quality of the contracts or the growth trend.

Step 2: Prepare the business (in good time)

This is the step that makes the biggest difference to the final price. Preparing the business for sale means:

• Reducing your dependence. Delegate client relationships, train your team to make decisions without you, document processes. If you disappeared tomorrow, would the business keep running? If the answer is no, there is work to be done.
• Cleaning up the accounts. Remove personal expenses, regularise assets, resolve outstanding contingencies. A buyer examines your accounts with a magnifying glass; anything that is not clear will reduce value.
• Securing revenue. Renew contracts, diversify the client portfolio if it is concentrated, consolidate recurring revenue.
• Looking after the team. Key employees are a fundamental asset. Make sure they are motivated and committed to continuity.

Step 3: Choose how to sell (before going to market)

You have two main paths:

Direct sale: You look for a buyer yourself, through your network of contacts or within the sector. It may seem simpler, but you put confidentiality at risk and you have less negotiating power.

With an M&A adviser: A professional manages the whole process — valuation, confidential search for buyers, negotiation, due diligence and completion. This is what we do at Alcara Partners.

Step 4: Manage the tax side

The sale of a business has significant tax implications that should be planned in advance. Depending on the structure of the transaction (sale of shares vs. sale of assets), the taxation can vary significantly.

Key aspects to consider:

• Taxation under personal income tax (IRPF) or corporate income tax (Impuesto sobre Sociedades) depending on the legal form and the type of transaction.
• Exemption for reinvestment in a life annuity if you are over 65: the gain is exempt if you use the amount obtained to set up a life annuity insured in your favour within six months, up to a maximum of €240,000 (article 38.3 of Ley 35/2006 del IRPF, the Spanish personal income tax act). It is advisable to confirm this with a tax adviser.
• 95% reduction in inheritance and gift tax (Impuesto sobre Sucesiones y Donaciones) if, instead of selling, you give the family business to your spouse or descendants: among other requirements, you must be 65 or older (or have an absolute permanent incapacity or severe disability), you must stop carrying out management functions and being paid for them, and the person who receives it must keep it for 10 years (article 20.6 of Ley 29/1987, the Spanish inheritance and gift tax act). It is advisable to confirm this with a tax adviser.
• Sale with deferred payment: if you receive the price in successive payments and the last one falls due more than one year after delivery, you can choose to recognise the gain as the payments become due (article 14.2.d of Ley 35/2006 del IRPF). It is advisable to confirm this with a tax adviser.

It is essential to have a specialist tax adviser who works in coordination with the M&A adviser. Good tax planning can make a significant difference to the net amount you receive.

Step 5: Prepare yourself (throughout the process)

This is a step that is rarely talked about and that can turn out to be one of the hardest. Retiring after running a company for 20 or 30 years is not just a professional change — it is a change of identity.

Some practical tips:

• Think about what you will do afterwards. Owners who have a personal plan — projects, hobbies, travel, collaborations — experience the transition much better than those who retire "into a void".
• Talk to your family. Your partner and your children have legitimate expectations and concerns about this transition. Include them.
• Accept that there will be grief. It is normal to feel a sense of loss, even when the decision is the right one. Do not ignore it.
• Negotiate a transition period. Many sale agreements include a period in which the seller accompanies the buyer. This makes for a gradual and calm exit.

The most common mistakes when selling on retirement

These are some of the most frequent mistakes:

1. Waiting too long. Every year you postpone preparation is value that is lost. The energy of the business declines when the owner has one foot out of the door.

2. Setting an emotional price. Your business is worth what the market is willing to pay, not what you need to retire comfortably or what you invested over the years. Learn about the factors that determine the real value of your business.

3. Not maintaining confidentiality. If employees, clients or suppliers find out that you are selling too early, the business can suffer.

4. Neglecting the business during the sale process. The company must keep running at full capacity while a buyer is sought. A drop in turnover during the process reduces the price.

5. Trying to do it alone. Business sales and acquisitions involve legal, tax, financial and emotional complexities that justify professional support.

Frequently asked questions about selling a business on retirement

Can I retire and stay involved with the company?

Yes, it is common to agree a transition period or a temporary consultancy contract after the sale. This allows the buyer to benefit from your knowledge while you make a gradual exit. The duration and terms are negotiated as part of the sale agreement.

How long does it take to sell an SME?

The active sale process usually takes several months. But the prior preparation (putting the accounts in order, reducing dependence, documenting processes) can take considerable additional time. That is why we recommend starting several years before the desired retirement date.

What happens to my employees if I sell?

If you sell the shares of your company, the employer remains the same company and the employment contracts do not change. If what is transferred is the business, a workplace or an autonomous production unit, article 44 of the Estatuto de los Trabajadores (Spanish Workers' Statute) establishes employer subrogation: the change of ownership does not in itself terminate the contracts, and the new employer is subrogated to the employment and Social Security rights and obligations of the previous one. In both cases your employees keep their rights, length of service and working conditions. It is advisable to confirm this with an employment adviser.

Can I sell just part of the business?

Yes, there are partial transactions in which you sell a business line or a percentage of the shares. This can be useful if you want to reduce your involvement without retiring completely, or if you want to keep a certain level of income while you make a gradual transition.

What happens if I cannot find a buyer?

It is a real possibility, especially for companies that depend heavily on the owner or in sectors with little demand. The alternatives include an MBO (a sale to the current managers), bringing in a managing partner or, as a last resort, an orderly closure. The sooner you start preparing the business, the more options you will have.

Take the first step

If you are thinking about retiring and want to know how much you could get for your business, start with the simplest thing: knowing its value.

Request your free valuation — it is confidential, carries no obligation and will give you an initial indication to help you make informed decisions.

And if you are already clear that you want to sell, talk to our team. We understand that it is not just a financial transaction — it is a life decision. And we are here so that you can make it with confidence.

References

• INE (Spanish National Statistics Institute). Directorio Central de Empresas (DIRCE). 1 de enero de 2025 (Central Business Directory; active companies by autonomous community). ine.es, 2025.
• Estatuto de los Trabajadores (Spanish Workers' Statute), article 44. Sucesión de empresa (transfer of undertakings).
• Ley 29/1987, de 18 de diciembre, del Impuesto sobre Sucesiones y Donaciones (Spanish inheritance and gift tax act), article 20.6.
• Ley 35/2006, de 28 de noviembre, del Impuesto sobre la Renta de las Personas Físicas (Spanish personal income tax act), articles 14.2.d and 38.3.