Published by Evolution Capital | IT/Telco M&A Specialists | 25 Years | 250+ Transactions
Evolution Capital · 25 Years · 250+ Deals
New To The Biz.
What every first-time IT services seller needs to know before they start a sale process.
Published by Evolution Capital | IT/Telco M&A Specialists | 25 Years | 250+ Transactions
25+
Years in technology M&A
250+
Transactions
$1bn+
In completed transactions
Evolution Capital · From the trenches
- At a Glance
What You'll Learn.
Selling an IT services business involves much more than finding a buyer. Founders should prepare for a process that typically lasts four to six months, maintain business performance during the sale, understand buyer expectations, protect confidentiality, and surround themselves with experienced advisers.
03
Running Your Business While Selling It
New To The Biz
We meet them all the time. Founders who have spent fifteen, twenty, sometimes thirty years building something genuinely impressive. They know every customer by name. They can tell you exactly why their churn rate is what it is, which members of staff are underperforming, which supplier relationships need renegotiating. They understand their technology stack, their cost base, their competitive position, and their market better than any outsider ever will.
And then they enter an M&A process for the first time, and they discover that none of that knowledge is quite enough.
You can be the most experienced IT managed services operator in the country and be completely new to the business of M&A. The terminology is different. The process is different. The dynamics are different. The emotional experience is unlike anything most founders have encountered before. And the decisions made in those few months, many of them under significant time pressure and stress, can be worth millions of pounds in either direction.
This article is not about whether your business is good enough to sell. It is about what first-time sellers need to understand before they start, and what they need to manage well to get to the outcome they deserve.
What Every First-Time IT Services Seller Needs to Know
The Emotional Reality
The Emotional Reality Nobody Warns You About
Most first-time sellers underestimate the emotional weight of a sale process. People warn about legal complexity, about diligence, about working capital adjustments. Almost nobody warns you about what it actually feels like to be in the middle of it.
Selling a business you have built is not a straightforward commercial transaction. It is, for many founders, one of the most significant events of their professional life. The business has often consumed the better part of a decade or two. It carries relationships, identity, and meaning that go well beyond the financial value. Separating yourself from it, on the explicit understanding that someone else is about to take it over and do things differently, is genuinely difficult.
And the process itself compounds this. A typical IT services transaction from initial engagement to completion runs four to six months. During that entire period, you are in a state of suspended animation: you cannot fully commit to the business as if you are staying, and you cannot fully let go because it isn’t sold yet. Every week brings new requests, new questions, new conversations with advisers. The emotional toll of managing uncertainty, for months at a time, is something most founders only understand in retrospect.
Add to this the specific stress of not being in control. You are used to making decisions and having them happen. In an M&A process, you are responding to a buyer’s timetable, a lawyer’s drafting, a diligence team’s requests. The process moves at its own pace and there is limited ability to force it faster, which for founders who are accustomed to controlling outcomes is genuinely uncomfortable.
None of this is a reason not to sell. It is a reason to go in with eyes open and properly supported.
We say this from direct experience: a significant number of the conversations we have with clients during a live sale process end up being less about financial mechanics and more akin to therapy or counselling. The questions are not always about EBITDA normalisation or working capital pegs. They are about doubt, about identity, about whether this is the right decision, about what comes next, about feeling out of control for the first time in years. These conversations are a normal and important part of what a good corporate finance adviser does, and founders should not feel embarrassed to need them.
Beyond your advisers, think about your personal support structure. A spouse or partner who understands broadly what you are going through, even if not the detail. A trusted peer who has been through a sale and can offer perspective. Close friends who know enough to check in on you. And if you think the emotional weight of the process may be significant, there is absolutely no shame in engaging a professional therapist or coach before or during the process. Some of the most successful and self-aware founders we have worked with have done exactly this. A sale process is a major life event, and treating it as one is entirely rational.
- Prepare your support network before the sale begins.
Key Takeaways
01
Prepare Your Support Network
Selling a business is easier when you have trusted people to guide and support you throughout the process.
02
Corporate Finance Adviser
Provides strategic guidance and helps maximise the value of your sale.
03
Legal Adviser
Protects your interests and ensures a smooth legal process.
04
Partner or Family
Provides emotional support during an important life transition.
Running Your Business While Selling It
The single most common operational mistake first-time sellers make is taking their eye off the business during the sale process.
This is understandable. A sale process demands enormous amounts of time and attention: data room preparation, management presentations, adviser calls, legal reviews, diligence responses. For many founders, this is effectively a second full-time job layered on top of the first one.
But buyers are valuing the business based on its current performance. If revenue dips, if key customers become unsettled, if staff morale deteriorates because people sense something is happening and don’t know what, the business being sold in month six is a worse business than the one valued in month one. This creates legitimate grounds for price adjustment. We have seen it happen.
One situation we encounter more than sellers expect: a founder who has been the primary relationship holder for the top two or three customers starts missing calls, delegating site visits, and generally becoming less visible during the diligence period. Not out of negligence, but because they are genuinely consumed. By month four, one of those customers has quietly started talking to a competitor. The buyer’s FDD team picks this up during customer reference calls. Suddenly a risk that was not in the information memorandum is in the diligence report, and the conversation about price reopens.
It is also worth noting that the time demands of a sale process are significantly lower when you have prepared well in advance. A seller who has clean management accounts, an organised data room, and a coherent financial narrative does not spend four weeks scrambling to produce information under diligence pressure. They respond to requests in days rather than weeks, which frees up time and mental energy to keep running the business. Preparation before the process is not just about getting a better price: it is about making the process survivable.
The practical answer on operations is delegation, and being deliberate about it. Before a process starts, identify which operational responsibilities you can genuinely hand to trusted members of your team for a period of four to six months. Empower them to handle day-to-day decisions without coming to you for everything. Brief your senior management that you are working on something important that requires your time, without disclosing the sale if you are not yet ready to. Keep customer relationships active, keep delivery quality high, and keep the sales effort going. A pipeline that stalls during the sale process because you stopped attending to it creates exactly the kind of revenue weakness that gives buyers an excuse to reprice.
Who to Bring into the Loop, and When
One of the most anxious decisions first-time sellers face is who to tell, and when.
The circle of people who know about a sale in its early stages is typically very small: the founder, their corporate finance adviser, and perhaps one or two trusted advisers. This is necessarily so. On many deals, advisers visiting a business for site meetings or management presentations have had to travel under the thinnest of cover stories. I have personally walked through client premises on multiple occasions introduced as a tax accountant, despite not having done much tax since my ACA exams. It is about as close as this job gets to feeling like James Bond. The slight problem, of course, is that if anyone in that office had taken a moment to look up my name on LinkedIn, the thinly veiled alternate identity would have dissolved immediately. The point is not that this approach is sophisticated: it is that the early stages of a process require strict confidentiality precisely because the consequences of a premature leak can be significant for staff morale, customer confidence, and the negotiating position with buyers.
The default instinct is to keep it completely confidential until the deal is done. This is understandable: premature disclosure creates uncertainty for staff, customers, and suppliers that can be genuinely damaging. But total secrecy throughout a four to six month process is also very difficult to maintain, and the consequences of a leak you didn’t control are often worse than disclosure you managed carefully.
Your advisers
Your corporate finance adviser, lawyers, and accountants need to know from the start. This is obvious. What is less obvious is that you need to brief them comprehensively, including the things you are worried about, the aspects of the business that are less clean, and the personal circumstances that are shaping your timelines and priorities. The more context your advisers have, the better they can support you.
Your senior management
At some point during the process, your most senior managers will almost certainly need to be brought in. This might be because they are being asked to present to buyers, because they are needed to prepare data room materials, or simply because diligence requests require their involvement. The question is not whether to tell them but when and how. Early disclosure, handled well, can be a source of support and alignment: managers who understand what is happening and feel included in the outcome are far more likely to perform well during the process. Late disclosure, or accidental discovery, creates anxiety and sometimes departures at exactly the moment you need stability. Think through the sequencing carefully with your advisers.
Key customers
Customers should almost never know about a sale before completion. There are rare exceptions, typically where a customer has a contractual change-of-control provision that requires consent, but the general principle is that customer communication happens post-completion, not during. The message at completion should be positive, future-focused, and backed by visible continuity of the people and service they deal with day to day.
Staff broadly
Under TUPE regulations, employees must be informed and consulted once a relevant transfer is sufficiently certain. Your advisers will guide you on the legal timing of this. What you can control is how it is communicated: the tone, the message, the questions answered upfront, and the reassurances given. Staff who receive news of a sale in a clear, considered way from their founder directly are in a very different position from those who hear about it through rumour.
Deal Speed and Timelines: What to Expect
First-time sellers almost always expect the process to be faster than it is.
A typical IT services transaction in the UK mid-market runs something like this. Initial market engagement and management presentation: four to eight weeks. Indicative offers received and shortlisted: two weeks. Preferred bidder selected and heads of terms negotiated: two to four weeks. Due diligence: six to ten weeks. Legal documentation: four to six weeks. Completion: one to two weeks after SPA signed.
Total: four to six months from serious engagement to money in the bank. Often longer. Rarely shorter.
Several things extend timelines. A first-time buyer on the other side of the table, as we explore in the rest of this article. Data quality issues that require extended FDD work. Legal complexity around group structures, IP ownership, or employee arrangements. Regulatory requirements including customer consents. And frankly, just the natural friction of two parties with different interests trying to reach agreement on dozens of specific points under time pressure.
Understanding this timeline before you start matters for two reasons. First, personal planning: if you have a specific financial need or personal timeline, you need to begin the process early enough to hit it. Second, business management: four to six months is a long time to maintain momentum, manage a team that is increasingly aware something is happening, and keep customers engaged while your attention is divided.
The pace of any individual process is also affected significantly by how well-prepared the seller is. Businesses that go to market with clean data, clear financials, organised contracts, and a coherent narrative move through diligence faster. Businesses that require buyers to reconstruct the financial picture from incomplete records extend every stage.
Now, About the Other New Kid on the Block
So far this article has focused on first-time sellers. But the dynamics described above, the uncertainty, the time pressure, the decisions made without a clear reference point, do not only apply to sellers. In many IT services transactions, there is another first-timer in the room – the buyer.
And when both sides are navigating the process for the first time, the friction compounds in ways that neither party fully anticipates.
The IT services M&A market attracts a significant number of buyers who have never completed an acquisition before: newly-formed PE funds making their inaugural platform investment, successful entrepreneurs deploying sale proceeds into acquisitions, corporate acquirers executing their first buy-and-build strategy, and family offices diversifying into operational businesses. They often have capital and genuine intent. What they frequently lack is experience of what an M&A process actually involves.
For a first-time seller, a first-time buyer on the other side creates a specific and predictable set of problems.
When a seller presents £1.8 million EBITDA, experienced buyers immediately understand this needs to be normalised: owner salary adjusted to market rate, non-recurring costs added back, related party transactions scrutinised. This is standard commercial practice.
First-time buyers don’t understand this framework. They hear £1.8 million EBITDA and think that is what they are buying. When normalised EBITDA comes out at £1.5 million after legitimate adjustments, they feel deceived. We worked on a transaction where the seller had clearly documented £280,000 in add-backs: founder salary excess, one-time legal costs, and non-recurring project work, all standard and well-supported. The first-time buyer reacted as if the seller had committed fraud. It took two weeks and involvement from both advisers to explain that this was entirely normal practice. An experienced buyer would have reviewed the normalisation schedule and moved on within 48 hours.
Every business has characteristics that experienced buyers expect: customer concentration, key employee dependencies, technology that needs updating. Sophisticated buyers assess whether these are manageable and price accordingly.
First-time buyers panic. A telecommunications business had 35% of revenue from its top three customers: material, but not unusual. The first-time buyer spent three weeks modelling scenarios where all three churned simultaneously, despite no evidence of dissatisfaction, and proposed a £2 million price reduction. The risk hadn’t changed. Their response to it had spiralled.
M&A transactions need structure and momentum. First-time buyers don’t know what is important. Every data point feels critical. They request hundreds of documents, many irrelevant, then get overwhelmed. They bring in additional advisers mid-diligence who want to review everything from scratch. They revisit settled points because they lack the confidence that comes from having done this before. We have seen deals that should have closed in ten weeks take twenty-two, by which point both sides were exhausted and trust had eroded.
Standard escrow for warranty claims typically runs 5 to 10% of purchase price for twelve to eighteen months. First-time buyers sometimes demand 25% for three years because they are anxious, without realising this is far outside market norms. They propose warranty scopes far broader than experienced sellers accept, and they sometimes lock into unreasonable positions because they simply don’t know the positions are unreasonable.
The biggest predictor of whether a first-time buyer can execute is the quality of their advisers. Some engage their regular business accountant and a general corporate lawyer, neither of whom has worked on M&A. These advisers mean well but don’t know market practice. Others hire good advisers but don’t give them clear authority, overruling recommendations on points their advisers have told them are untenable. Either creates delays, disputes, and unnecessary friction.
How to Assess and Manage a First-Time Buyer
Who’s leading legal work and financial diligence, and what’s their M&A experience?
Look for self-awareness
“We haven’t done this before, so we’ve engaged an experienced FDD firm and M&A law firm” is the strongest positive signal available.
Test decision-making speed early
If it takes two weeks to agree NDA terms, expect the rest of the process to reflect it.
Impose structured timelines in writing
before granting exclusivity diligence complete within six weeks, legal documentation within two, completion within ten.
Prepare detailed normalisation documentation upfront.
Pre-empt the “you’ve misrepresented profitability” reaction by explaining every adjustment proactively.
Keep alternative buyers warm.
The knowledge that you have genuine alternatives is the most effective discipline on a first-time buyer’s behaviour.
When First-Time Buyers Work Well
Despite the challenges, some first-time buyers execute very well. They acknowledge their inexperience and defer to experienced advisers. They make decisions quickly despite uncertainty. They maintain emotional discipline rather than letting anxiety drive constant renegotiation. And they’ve done serious homework before engaging, so they understand the sector, the business model, and the key value drivers before they submit an offer.
When these factors are present, first-time buyers can be excellent partners: enthusiastic, fair, and willing to structure creative deals precisely because they’re not constrained by institutional playbooks. The question is never whether the buyer is experienced: it is whether they have the self-awareness and the adviser quality to compensate for their inexperience.
The Cautionary Tale
A managed services business with £10 million revenue and £1.6 million EBITDA received an offer from a first-time buyer: a successful entrepreneur who had sold his own tech business for £50 million and wanted to deploy the proceeds. Well-funded, intelligent, genuinely excited. Initial negotiations went smoothly at £12.8 million.
Then diligence began. In week two the buyer requested over 300 documents, many irrelevant, and became overwhelmed. In week four he discovered normalised EBITDA was £1.5 million, felt deceived, and threatened to walk away despite this being clearly documented. In week six his accountant, who had never worked on M&A, flagged customer concentration as a critical risk. The buyer panicked and demanded a £2 million reduction. After intensive negotiation they agreed to £11.5 million with an earnout. Then the buyer’s lawyer drafted warranties far broader than market standard. Negotiations stalled. In week twelve a new M&A adviser was brought in who recommended restructuring the deal entirely.
By week eighteen, both sides were exhausted. The deal collapsed.
The seller re-engaged the market, received an offer from an experienced PE fund at £11.2 million, and closed in nine weeks with no drama.
The first-time buyer had offered more money. The experienced buyer offered slightly less and actually closed. Deal certainty has value that doesn’t show up in the headline number.
How We Help
The experience gap on both sides of the table is something we manage every day.
Corporate Finance
When we run a sale process, we assess buyer quality alongside buyer pricing from the outset. A £14 million offer from a first-time buyer with inexperienced advisers is not necessarily a better outcome than £13.2 million from an experienced acquirer with a track record of closing efficiently. We know most of the active buyers in the UK IT services market, and we structure processes to create competition among buyers who can actually execute.
Financial Due Diligence
We act as FDD adviser on acquisitions across the IT and Telco sector, which means we have seen hundreds of diligence processes from the buyer’s side. We know exactly what questions get asked, what findings create friction, and what makes a business easy or difficult to underwrite.
EC Analytics: Virtual CFO / CFO Assist
The best protection against the problems in this article whether from an inexperienced buyer or seller is financial data that is clean, consistent, and impossible to argue with. EC Analytics builds that infrastructure before the process starts: management accounts, normalisation schedule, customer data, working capital analysis.
How Evolution Capital Can Help
- Our Blog
Related Articles
How long does it typically take to sell an IT services business in the UK?
A typical mid-market IT services transaction runs four to six months from serious engagement to completion. This covers management presentation and indicative offers, heads of terms negotiation, due diligence of six to ten weeks, legal documentation, and completion. Timelines extend when there are data quality issues, a first-time buyer on the other side, or complex legal or regulatory matters. Sellers who go to market well-prepared consistently move through the process faster.
When should I tell my management team that I am selling the business?
There is no universal answer, but the general principle is: earlier than most founders think, later than they fear. Senior managers who are brought in at the right moment, briefed clearly, and made to feel part of the outcome are more likely to perform well during the process and support the transition post-completion. The timing depends on whether they are needed for diligence preparation, whether there is a risk of leaks, and your personal relationship with each individual. Your advisers should help you think through the sequencing.
Should I tell customers I am selling the business?
Almost never before completion, with limited exceptions where a customer contract has a change-of-control provision requiring their consent. Customers are generally notified at completion, with a positive, forward-looking message emphasising continuity of service and the people they deal with. Pre-completion disclosure creates unnecessary uncertainty and occasionally prompts customers to take actions they would not otherwise have taken.
What is the emotional reality of selling a business for the first time?
More intense than most founders expect. A sale process runs for months in a state of uncertainty, during which you are neither fully in nor fully out of the business, responding to a process that moves at its own pace. The combination of time pressure, emotional attachment to what you have built, and the magnitude of the financial decisions involved is genuinely stressful. Having experienced advisers alongside you, a clear plan for managing the business through the period, and realistic expectations about the timeline all help. Many founders describe the process as harder than they expected and the outcome as more satisfying than they anticipated.
Are first-time buyers a good or bad option when selling an IT services business?
Neither automatically. First-time buyers can pay premium prices, offer flexible structures, and bring genuine enthusiasm. But they create predictable problems: longer timelines, overreaction to normal diligence findings, process chaos, and misunderstanding of market conventions. The key question is not whether the buyer is experienced but whether they acknowledge their inexperience and have surrounded themselves with advisers who are. An experienced corporate finance adviser on the seller’s side can manage much of the risk a first-time buyer creates, provided the process is structured correctly from the outset.
How do I keep the business running while going through a sale process?
Deliberately and with advance planning. Before the process starts, identify operational responsibilities that can be genuinely delegated to trusted senior staff for four to six months. Empower them to make day-to-day decisions without constant escalation. Brief them that you are working on something important without disclosing the sale prematurely if that is not yet appropriate. Keep customer relationships active, delivery quality high, and the sales pipeline moving. A business that dips in performance during the sale process gives buyers grounds to reprice.
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