Partial Sale Valuation

What is a partial sale?

A partial sale involves selling a percentage of your business, typically between 30% and 70%, to a financial or strategic investor, while retaining the balance and continuing in an active role. You receive cash at completion. The business continues under your leadership. The incoming investor provides capital, expertise, or strategic value, and holds a stake in the upside of what you build next.

For many UK SME founders approaching a transition, a partial sale offers a better fit than a full exit: it de-risks personal wealth, provides liquidity without a complete break, and positions the business for a larger full exit at a higher valuation later.

How is a partial sale valued?

Valuation for a partial sale follows the same methodology as a full sale. EBITDA multiples applied to normalised earnings, benchmarked against comparable transactions in the sector. The total enterprise value is agreed first. The consideration you receive is the agreed percentage of that total, adjusted for any minority discount.

A minority discount reflects the fact that the incoming investor does not control the business. The size of that discount, typically 10% to 25%. Depends on the governance rights attached to the stake, the quality of the shareholders' agreement, and the agreed mechanism for a future full exit. Well-structured partial sales with clear exit paths and strong governance minimise the discount significantly.

Who buys a partial stake in a UK SME?

The most active buyers of partial stakes in UK SMEs are private equity houses and growth capital investors operating in the lower mid-market, typically writing cheques of £1m to £10m for businesses with EBITDA of £500k to £3m. Strategic investors. Larger businesses in adjacent sectors looking to acquire capability or market position. Are increasingly active at this level.

Family offices with patient capital are a growing source of partial stake investment, particularly for profitable, cash-generative businesses where the founder wants a long-term partner rather than a time-pressured PE fund.

The second bite of the apple

The most compelling aspect of a partial sale is what it enables next. A founder who sells 40% of a business valued at £3m today receives £1.2m at completion. If the remaining 60% stake is then sold in a full transaction five years later at a valuation of £6m, the founder receives a further £3.6m. A total of £4.8m across both transactions, compared to £3m from a full sale today.

This is the second bite of the apple: the combination of immediate liquidity and continued equity participation in future growth. It works when the founder has genuine runway ahead, the incoming investor adds real value, and the business has credible growth potential. A professional valuation at the point of the partial sale, and again as the full exit approaches. Is the mechanism that ensures both bites are sized correctly.

What makes a good partial sale candidate?

Businesses best suited to partial sale are those with demonstrable profit of at least £500k EBITDA, a management team capable of operating independently of the founder, a genuine growth plan that benefits from capital or strategic input, and a founder who wants continued involvement but wants liquidity now.

Businesses where the founder is the primary client relationship, where profit is highly variable, or where the business model is not scalable are harder to position for partial sale. The incoming investor is buying a stake in something that depends on the person selling it, which limits appetite and depresses the multiple.

Getting the valuation right before a partial sale

The valuation in a partial sale is the foundation of everything. The stake percentage, the consideration, the governance terms, the path to full exit. An independent sell-side valuation, carried out before any investor conversation begins, gives you a defensible number grounded in market evidence.

It tells you what a buyer would pay for the whole business, which anchors the partial sale price correctly. It identifies the value drivers and risks a potential investor will examine. And it gives you the confidence to negotiate from a position of knowledge rather than reacting to what an investor puts in front of you.

Get an independent partial sale valuation

Speak confidentially with Tony Vaughan before approaching any investor. Understand what your business is worth, what a partial sale structure should look like, and what the path to a full exit could achieve.

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