For businesses in the healthcare and life sciences sector, there are various elements that go into a successful sale. However, the sellers who achieve the smoothest process and strongest valuations are usually those that have prepared early: clarifying their sale structure, resolving diligence issues and demonstrating regulatory readiness.
With the UK healthcare market experiencing a busy start to 2026, now is a good time for business owners to consider whether they are sale ready.
This guide focuses on preparing your business for sale. A separate article in due course will consider issues that arise relating to the retention of key individuals in your business, and how these are managed through offering of management equity and other incentives arrangements.
Here are some things to consider when preparing your healthcare business for sale:
Initially, you will want to consider in what form your business is to be sold. It may be that a single legal entity operates the business and a buyer could acquire the shares in that legal entity. However, it may be more appropriate for a buyer to purchase the assets of a business. This may be suitable in instances where the target business isn’t held in a corporate structure, or where the proposed buyer operates multiple businesses and wants to fold in the acquired business into an existing corporate structure.
All things being equal, a share sale transaction is more likely to be a cleaner transaction to execute, as the acquisition of single corporate entity tends to be more streamlined than the acquisition of the entire assets of a business.
If you consider that share sale is appropriate, you may want to ensure that the business is run from a single legal entity, and whether any restructuring needs to occur so that any acquisition can be for a single target. Arranging that re-structuring ahead of time can simplify transactions and make your business more appealing for bidders.
If an asset sale is more appropriate for your business, you will want to understand where the assets sit and consider whether pre-sale restructuring would help streamline the transaction. In an asset sale scenario, significant consideration will be given to consulting with staff on TUPE regulations and informing them of the potential changes to working arrangements that may occur as a result of the sale.
To assist with the proposed sale process, and to identify and discuss with potential bidders, you may wish to engage corporate finance advisers. Corporate finance houses will typically be able to advise on an appropriate process for the transaction and can provide assistance throughout the lifetime of a transaction. Their role can include putting together an ‘Information Memorandum’ (setting out the proposed terms of any sale) and modelling adjusted earnings before interest, taxes, depreciation and amortisation (or ‘EBITDA’) that will be referenced by potential purchasers in putting forward a price. Their engagement, however, may come at a material cost that is typically taken from the sale proceeds.
The majority of sale processes will involve the establishment of a virtual data room for information relating to the business. There are many different ways of managing the demands on management time and external costs of setting up a data room. Corporate finance advisers can assist with establishing and maintaining a data room. And your legal advisers can help you identify the most cost-effective solution for your transaction, including helping you to identify an appropriate data room platform.
Buyers will want to understand whether key revenue, supply and operational agreements will continue after the acquisition. As a seller, you will be subject to legal due diligence where the buyer’s legal advisers will review your businesses commercial contracts and advise on whether there are any material issues. Identifying these issues ahead of then can help manage a transaction timetable and prevent the deal being lost. Intellectual property and exit provisions are areas that will be of particular concern for a buyer’s review.
If the core of your business is underpinned by certain IP, then you will need to consider how this intellectual property is held. Is it created and maintained by the business, or is the IP subject to a licence for use? If there is a licence, then is this licence subject to a written agreement that you can provide to a potential buyer? Is that licence on suitable terms, and how does it operate in an exit scenario?
For example, if your business has spun out of a university, then we would typically expect there to be a licence agreement with that university for use of certain intellectual property. You should be comfortable that the licence is comprehensive, and what terms apply in an exit scenario. Does the licence ensure that the relevant IP remains with the business on an exit, and when does the transfer of that IP occur (this should be prior to completion of any exit process).
If there are potential issues with material licences, then these would ideally be addressed, or in the process of being addressed, ahead of a sale process. In a sale situation, the ideal position for a buyer would be that outright assignment of the IP from the university to the business, which the buyer then acquires (and is sometimes then subject to a subsequent licence back to the business). As a seller, you want to:
(i) understand the position relating to your IP, and how it is held by the business; and
(ii) initiate discussions with higher education institutions early, as they often have internal decision-making processes that may take time.
Further, a buyer will be keen to understand how you have sought to protect your IP, whether that is through any registered IP, or including appropriate restrictive covenants in your employment contracts to ensure key employees do not exploit business IP for your competitors.
Typically, a buyer’s advisers will review key contracts of your business for provisions relevant in an exit scenario. Key areas will be provisions relevant on a change of control (where shares are being sold) or require consent to the assignment of a contract (where you are selling your business assets). These provisions may state that if third party consent is not obtained then the contract may be terminated.
If a third party’s consent is required for an exit, then this can be a material part of the transaction, as that supplier or customer may be material to the ongoing success of your business. As a seller, if you can identify key customer or supplier contracts which contain exit provisions, you can flag these to the buyer so all parties are aware of the potential risks, and how that risk can be managed. Buyers may be keen for you to contact suppliers or customers to obtain waivers of these exit provisions ahead of completing on an acquisition, but you will understandably be reluctant to notify key counterparties of an impending, confidential, transaction. This balance of a buyer’s desire to reduce risk ahead of a transaction, and your need to run the business during the sale process, will be a particularly important point of negotiation.
For example, if your business has an agreement with the NHS which is part of the NHS supply chain and/or subject to the NHS general terms and conditions, then these terms and conditions may contain change of control provisions, which a potential buyer will be aware of. You will then want to discuss whether the proposed change of control will be of concern to the NHS supply chain, and whether you want to discuss this with them ahead of completion.
Similarly to wider commercial arrangements, if there are issues with the regulatory position of your business, then these will be material to a buyer and may take time to address. Understanding your regulatory framework and ensuring you are sale ready is therefore important to a successful sale process.
For example, if your business is subject to inspection by the Care Quality Commission (CQC), then buyers will be keen to see the result of a recent inspection. However, nearly 20% of providers were, as of October 2025, unrated and some inspections were conducted over a decade ago. If your business does not have a recent CQC inspection report, and a more recent inspection is not anticipated (some services have been waiting for inspections for more than five years), then you could consider an independent audit as part of the sale process to help get a buyer comfortable with the standard of your services.
In particular, an independent audit can be useful in providing a buyer with reassurance that the business has appropriate practices, registrations, policies and procedures in place to ensure compliance with all relevant legislation, regulations and guidance (including but not limited to the Health and Social Care Act 2008). It can also help demonstrate that there are no obvious issues which are likely to give rise to regulatory action by the CQC if an inspection were to take place in the near future.
Separately, if you are a manufacturer, a UK Responsible Person acting for an overseas manufacturer, a distributor, or an importer of medical devices, you should be prepared to demonstrate to a buyer that all required Medicines and Healthcare products Regulatory Agency (MHRA) registrations are in place. You should also be able to evidence the existence of appropriate quality management systems and controls and show that you are complying with the regulatory obligations that apply to your role within the medical device supply chain.
Further, your business may also be subject to competition regulation, including by the Competition and Markets Authority (CMA) or as required under the National Security and Investment Act 2021 (NSIA).
Under the NSIA, if a transaction falls within 17 specified key sectors, then there may be a mandatory notification requirement on a buyer. The notification process can take a number of weeks. Where a mandatory notification is required, but not made, the transaction is deemed void, so it is in all parties interests to ensure that a notification is made if needed.
Similarly, whilst there is no requirement to notify under merger control regime, if there are potential competition implications of the acquisition, then a buyer may wish to engage with the CMA about the transaction process. Buyers may look to include a condition in the acquisition documents that there will be no investigation by the CMA, but as a seller you do not want that risk to be your problem. More widely, you will want to be live to any potential risks that the buyer is looking to pass on to you as sellers, when a discussion can be had as to whether these should be shared.
The obligations of such regulations may not seem directly relevant to you as a potential seller, but the scope of such legislation is broad and can catch even small healthcare and life sciences business.
Under the NSIA, there is a specific key sector of Synthetic Biology which is relevant to many life sciences businesses, and the scope of other key sectors is relatively broad.
Under competition regulation, depending on the nature of the market your business operates in, it may become relevant for that particular market.
In both instances, providing effective information to the buyer is helpful for all parties, so it is important to be forthcoming with information and open negotiations/discussions early with proposed buyers.
On the sale of a business, the sellers will often be required to give general warranties as to the status of the business to help protect the value provided by the buyer. Similarly, if a buyer identifies specific issues as part of any diligence exercise, then they may seek for sellers to give an indemnity covering potential costs associated with that issue.
This means that, for a period of time after the sale (which is negotiated on a deal-by-deal basis) the sellers will have a potential financial liability.
Sellers may seek to reduce this potential risk by requesting that a warranty and indemnity insurance (W&I) policy is taken out on inception of the deal. More typically, these policies are taken out by the buyer (a buy-side policy), who would then seek a claim against the insurer in the event of a breach of warranty or indemnity that was subject to the W&I policy. The sellers would only have liability if the relevant claim was not subject to coverage.
Sellers can take out policies (a sell-side policy) where, when they are subject to a claim, the sellers claim against the insurer for the relevant amount (subject to coverage). If a corporate finance house is engaged on the sell-side, they will engage a W&I policy broker to identify (for a potential buyer) the insurance terms that may be available on the deal, which can help increase the attractiveness for a buyer of a particular deal.
A W&I policy is particularly helpful where sellers want a clean exit, where multiple individual sellers are involved or where institutional or overseas buyers expect insurance backed deals.
A buyer may be nervous about potentially bringing claims against individual sellers as they have no comfort that you actually have the cash available to settle a claim, or, they have concerns about bringing a claim against an employee (if you remain engaged with the business). It also helps streamline negotiations as, generally, warranties are subject to a £1.00 cap (with the insurance covering potential claims).
However, it is not suitable for every transaction. Premiums, underwriting requirements and the need for detailed due diligence (including financial, tax and legal) reports may make it disproportionate for smaller deals.
If you consider that a W&I policy is worthwhile, negotiations will therefore need to be had as to what form of policy (whether buy-side or sell-side) is taken out, and how the cost of any policy will be met. The parties would also need to consider treatment of the matters that are not covered by the W&I policy, and whether the buyer or seller will stand behind that potential risk.
As part of initial discussions with prospective acquirers, you could raise a requirement for the deal to be W&I policy backed early, so that acquirers are aware, and may agree to this condition for their bids to be competitive. In healthcare transactions, underwriters may focus closely on regulatory diligence, claims history, clinical risk and material contracts, so sellers should consider those particular areas in detail.
For many people, selling their business is one of the most significant and stressful events of their lives. Early preparation for this event can help to reduce the issues arising on a sale process and crucially can help to ensure that deals are not lost part way through the sale process.
Appointing advisers who have experience of the specific needs of the healthcare, digital health and life sciences sector will also assist to make the sale process as smooth as possible. Ashfords have the experience and industry insights to help clients navigate the sale process. For further information on the services we offer, please see our sector page.
For any more information please contact Charles Davies on: cs.davies@ashfords.uk or Jocelyn Ormond on j.ormond@ashfords.co.uk
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