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Why All Business Sellers Should Practice Strategic Patience

Why All Business Sellers Should Practice Strategic Patience

For many business owners the decision to sell your business is the biggest financial decision you are ever going to make. Why is it then that we have all heard of owners who was in such a rush to sell their company that they accept the first offer, only to later regret their decision when they learn that they could have sold it for more? If only they had applied strategic patience.

Strategic patience is the ability to give yourself enough time to stop and think before making your next move. It is that moment when negotiations get tough between yourself and the buyer, that you need the confidence to wait and get a few comparable offers in order to think and not rush your decision. This enables you to be in control of the situation so you can secure the best deal for more money.

3 Steps to Achieve Strategic Patience:

  1. Give Yourself Enough Time

When it comes to selling your business effectively, preparation is key. Many owners make the mistake of leaving everything to the last minute. Instead you should be preparing and planning your exit years before you decide to put your business on the market. In order to implement strategic patience, you must have a structured timeframe that allows you to give a ‘no rush’ attitude. It’s almost counter intuitive to not want a sale to go through as quickly as possible. However, it is important during negotiations to give yourself enough time to stop, take a step back and assess whether this buyer is the right fit and whether you are happy with the deal. You might think to yourself I have slowed down this deal by rejecting it or taking time to think about it, but this is not the case. The world continues to move at a fast pace, the buyer(s) will still be interested, but you will now have the advantage [1].

  1. Have The Confidence To Walk Away

Next you need to have confidence in your business and its worth. If the situation allows it, you should practice the term ‘walking away from the deal’. If you feel that an offer is on the low side you should be able to say; thank you very much, we’d love to do a deal with you, if we could bring these two businesses together then we would all do very well, but I am sorry the offer is just not good enough, so I will be ending the negotiations now. If you can do this with conviction, then you are applying strategic patience. You are effectively saying to the buyer that you are confident your business is worth more and that you are in no rush, which swings the pendulum back in your court. Therefore, strategic patience is about having the confidence to wait for a higher offer or for a new buyer to express interest.

  1. Understand Your Plan Of Action

Last but certainly not least, understanding your plan of action when it comes to selling is critical. If you don’t understand what your plan of action is, then you will not have the confidence to apply your strategic patience. What you will think is you are shooting yourself in the foot, when you are walking away from a deal. However, you need to understand the bigger picture, which is that you are actually playing your ace card rather than walking away. Once you understand the strengths of strategic patience only then can you apply the confidence to wait and in doing so, you are able to give yourself an advantage when it comes to selling your business.

Tony Vaughan, Managing Director at Vexus has first-hand experience of helping a client achieve strategic patience: “I had a client where myself and the business owner met with the potential buyer and their board of directors three times. The conversations were positive, and the companies were a good fit. Then unexpectantly the buyer decided they were no longer interested. Understandably my client starts to panic and question perhaps if we had done something wrong or whether we should go back with another offer. My client was unable to see the wood through the trees and was independently unable to apply strategic patience.

I reassured my client that they had a fantastic business, fundamentally nothing has changed and let’s not chase it. So, we went back to the buyer and said we respect your decision as we said from the beginning we are in no rush, we will carry on looking for another buyer, thank you for your time. Then 3 months later the same buyer comes back again with an offer and now we know that they genuinely want to buy the business, the pendulum swung back into our court. Long story short, we ended up getting a better deal for our client than we would have before, if we let ourselves be manipulated by the buyer and didn’t apply strategic patience.”

Ultimately if you practice giving yourself enough time, have confidence in your business and understanding your plan of action. You can apply strategic patience when selling your company which puts you in control of the situation and increases the chances of you securing a better deal and for more money.

If you have a business you’re considering selling and you want to know how strategic patience can work for you contact us here.

[1] ‘The zen power of simply doing nothing’ John Goulding, City A.M. May 29, 2019

How to Find the Right Buyer for a Business

How to Find the Right Buyer for a Business

How to Find the Right Buyer for a Business


When it’s time to consider the sale of a business, one of the first lessons for business owners is to recognise that no two buyers will be the same. It is vitally important that the seller understands the business sale process and understands the various motivations that drive different business buyers.

Qualification of a Business Buyer

It is imperative for a seller to qualify any potential buyer at the earliest possible stage regarding their motivation and ability to complete a deal. A lot of time can be wasted, and sensitive information released to buyers who on reflection were never able or serious about the purchase of the business.

After qualification and scrutiny of the buyer’s motivations, their experience and financial ability to complete the acquisition, a high proportion of buyers will simply not “cut the mustard”. At this point, a clear and focused decision needs to be made as to whether to continue or cease discussions. This effective culling process quickly eliminates time wasters and allows time to concentrate on serious acquirers who are able to move forward.

The Marketing Process

If marketed correctly, most businesses will attract early interest from potential acquirers, this often includes friendly businesses in the same sector who have previously shown interest in acquiring the business. All potential buyers will have different reasons to want to acquire your business, they will all seem friendly and keen to discover as much about your business as possible.  Marketing a business is not a one-off activity, confidential marketing must continue in full force until a deal has been agreed and Heads of Terms are signed. Regular new interest in the business provides the seller with confidence and the ability to negotiate with multiple buyers and secure the right deal.

Many buyers open negotiations hoping that the seller has not marketed the business widely or effectively with the aim of becoming the only bidder and taking control over price negotiations, a seller should not under any circumstances fall into this trap. Always remember, competitive tension from two or more buyers drives the price, it’s not the business valuation.

Nosey Competitors

Confidentiality is also vitally important to the business seller, from the initial marketing stage and throughout the entire sale process. As part of the process, sensitive information will be released to potential buyers; this is likely to include business processes, staff, financials, growth plans etc. All sellers should be aware that competitors will often pose as potential buyers to gain an insight and understanding of a business operation. Sellers are generally protected by a Non-Disclosure Agreement, however a strong buyer qualification process at an early stage is the best remedy and will help avoid time wasters and keep nosey competitors at bay.

Financial Buyer Vs Strategic Buyer

Behind each buyer, the motivation to acquire will vary.  A high proportion of business buyers are generally motivated by the purchase price and cost / staff reductions achievable, they are often competitive to the seller and want a quick return on investment at minimal risk and tend to focus on past financial performance. We refer to these as ‘Financial Buyers’.

Other buyers will be motivated by future growth, entry to new market sectors and complementary synergies between the two businesses, rather than cost reduction as a reason to acquire. They are not competitive to the seller and are able to identify cross-sale opportunities and develop new markets by focusing on the future growth and profits, not just the past financial performance. We refer to these as ‘Strategic Buyers’.

The Right Buyer for a Business

If the business owner has limited or no previous business sale experience, they should consider engaging a professional advisers and broker to manage the marketing, negotiation and due diligence phase on the sale. If marketed correctly, the seller should expect to receive interest from a number of qualified buyers and over time, more than one offer for the business, the more offers received within a managed exit process the better. These different offers will help the seller understand the true value of the business and will provide them with live comparisons and deal structure available from different buyers.  It also puts the seller firmly in control of the negotiation process from competitive tension between motivated buyers.

The reality is a business is only worth what a buyer is prepared to pay. The greater the business synergy, market opportunity, profit potential and competitive tension, the more a buyer will be prepared to pay.

Business Seller’s should be cautious about agreeing a deal with the first buyer who shows interest, the commercial reality is all sellers should find and negotiate with a few qualified strategic buyers and only progress the sale with a buyer who is excited about the business, its future and is prepared to pay a premium purchase price.

Tony Vaughan

Managing Director

Vexus Corporate Limited


Copyright – Vexus Corporate Limited 2018

The Good, the Bad and the Ugly!

The Good, the Bad and the Ugly!

How to choose your business sale broker

So, after spending many years of blood, sweat and tears building your business, it is time to sell.

Regardless of the number of years you have invested to get your business where it is today, it’s safe to say that you probably want to maximize the business sale proceeds (net of tax), complete the sale as quickly as possible without damaging the business whilst also protecting management and employees as far as possible.

You have decided that trying to sell without professional help is risky and you cannot secure the confidentiality a normal business sale requires. Perhaps it is time to talk to a business sale professional, but who do you contact?

Every year in the UK many thousands of businesses change hands, from the small ‘one man bands’ to large multi-national corporations. In many of these transactions, a broker is involved to initially find the right buyer and then support the process to completion. Business sale brokers come in all shapes and sizes and one size does not fit all; no two business broker firms are the same.

When choosing your broker, you need be happy with both the broker firm and the individual broker that will represent you.  Ask the questions that are important to you and make sure you get a straight answer. As a minimum you should be asking:

Who will be my deal-maker if we work together?

You need to understand who will be representing you at the key points in the sale, don’t be sold to by the Senior Broker Executives who then palm you off to a Junior with less experience. It is likely you will work with your broker for up to 12 months if not longer, you need to like them, trust them and they need to be the ultimate professional at all stages.

What marketing will my business receive?

Ask for a marketing plan and if you are targeting a trade buyer, do not under any circumstances accept an advertising only plan. Successful brokers will go and find you the right buyer, they won’t just wait for the phone to ring.

What size of business do you normally represent?

If your business has a turnover of £1 million, don’t go to a broker who normally sells businesses for £10 million. Your broker needs to have the right experience and motivation, too small and you might not get the effort and enthusiasm you and your business deserve, too big and you are taking unnecessary risks.

If you choose the wrong firm, individual broker or both, you will likely put unnecessary pressure on the sale and the timescales and in some circumstances, you could put your eventual exit back by years.

Do your research, meet two or three different brokers and choose a) who you feel will best represent you and your business and b) who you feel will support you and help negotiate your best deal.

You will only sell your business once, so get it right first time.

For more information, see our brochure here

Due Diligence & The Disclosure Letter

Due Diligence & The Disclosure Letter

Key Aspects of the Due Diligence Process and the Importance of a Comprehensive Disclosure Letter.

In any corporate transaction, the buyer will want to be sure that the seller, or the target company, has good title to its assets and has no outstanding claims that could affect the business’s operations. To give this comfort, the buyer will undertake due diligence.

A solicitor will help streamline the due diligence process, which can help in hitting a completion date. If acting for the sellers or the target, a solicitor will respond to the due diligence enquiries. Where acting for the buyer, a due diligence report will follow, which will flag up any areas of concern. A purchase price can be subject to the results of any due diligence.

Key Aspects of Due Diligence

Due diligence is broadly split into financial due diligence, i.e. the target’s outstanding liabilities and liquid assets, and legal due diligence, i.e. employees and intellectual property.

With regards to legal due diligence, the enquiries to raise will depend on the target’s market. However, broadly speaking, the following seven enquiries should always be raised:

  1. Contracts: if the target offers a service, then are there watertight terms and conditions for the target’s engagement to provide services? What are the risks of these terms and is there any exposure? If the target sells goods/products, then does the target have standard form sale contracts? If so, are these contracts compliant with the implied statutory provisions, and/or the regulations of the EU?
  1. Employment: does the target have employees? If so, have they all been provided with written terms of their employment? If the buyer is acquiring assets, then TUPE will likely apply. In the last twelve months, have there been any dismissals/redundancies, and if so, how have these been dealt with? Another key area is employment policies, and whether they are in place, e.g. bribery policy, and grievance procedures.
  1. Disputes: is the target subject to any ongoing dispute with a supplier, client, or customer? If so, will completion be conditional on the resolution of any dispute subject to the satisfaction of the buyer? The seller should take steps to resolve disputes out of court, as litigated matters in the courts can become protracted.
  1. Intellectual property: from a seller’s perspective, it always pays to have the business’s intellectual property rights adequately protected. If the target has a revenue stream through a licensing model, then a review of the licence agreement can help address any areas of concern.
  1. Assets: how is the purchase price arrived at? If the seller owns a large portfolio of fixed illiquid assets, then the seller will want the business valued using EBITDA. That is to ensure that the value is not diminished by amortisation and depreciation. A target with consistent cash flow and a high level of goodwill will likely wish for a valuation based on EBITDA. A buyer should look to the terms of any property lease, which may have change of control provisions that can be triggered on a business sale.
  1. Compliance: many tech-driven businesses rely on software usage and large quantities of data. How is that data protected? Is the business registered with the Information Commissioner’s Office (ICO)? Does the target ensure that the business only transfers or processes data to recognised entities having appropriate protection in place? Transfers of data outside the EEA bring special considerations.
  1. Ownership: bespoke articles and/or shareholders’ agreement will usually contain provisions relating to share transfers. Do the majority shareholders have the right to “drag” the minority into a sale? Likewise, do the minority shareholders have the right for their shares to be bought out by the buyer? This will depend on how the purchase is structured.
The Importance of the Disclosure Letter

On completion of the due diligence exercise, the buyer will likely insist on warranties and/or indemnities from the seller. Those warranties and indemnities will address any issues that the buyer discovers during the due diligence exercise, e.g. warrant that the business does not control or transfer personal data if the buyer discovers the target is not registered with the ICO.

A seller will then have to fully fairly and accurately disclose against any warranties that the buyer requests. For example, the buyer may request that the seller warrants that “there have never been any employment claims against the target company”. The seller then discloses against this warranty in the disclosure letter, similar to “the target has had a claim from one employee for constructive dismissal in 2010, which was dismissed by an employment tribunal”. The seller would then disclose the tribunal’s judgment as an annexed document.

Therefore, the disclosure letter is extremely important as it will qualify any warranties that the seller is required to make. It can help protect the seller in the event a claim is made by the buyer against the seller for breach of warranty. A seller should disclose as much information as possible, so as to flush out any warranties.

Protecting Sellers in the Purchase Documents

A seller should look to cap liability for warranty breach within the purchase documents.

The usual way to do this is to cap the seller’s liability to the buyer in the event of a warranty claim at an amount equal to, or a percentage of, the purchase price. The actual level of liability cap will depend on negotiations, due diligence, the seller’s exposure, and the buyer’s assessment of the target’s risk.

Gannons are a boutique firm of corporate and commercial solicitors based in central London. Gannons have an extensive track record of handling sales and purchases of private limited companies. Helen Curtis is a partner in the corporate and commercial team at Gannons. Helen can be contacted on 0207 438 1065, or

Selling Your Business – The Two Step Process

Selling Your Business – The Two Step Process

The Two Step Process To Selling Your Business


For a business owner, the sale of their business can be a daunting process. Unless you’ve been through the sale process before, people rarely know what to expect and are very conscious about asking for advice. It is important to remember that selling your business is a two step process. It is commonly thought that as soon as a broker is engaged, that is the end of the process and the business will be sold to the first buyer that comes along; but that is most definitely not the case. In fact, engaging a broker is just the beginning of the process and is by no means the time for a Business Owner to sit back and relax. It’s important to understand the two steps to selling a business.

Step 1

Confidentially taking the business to market
Step one is all about testing the water, seeing how buoyant the market is and seeing what type of buyers the business attracts. It is essential to keep this stage confidential as it can be detrimental for the business if customers, competitors and suppliers find out that a business is selling (unless the release of information has been carefully managed). Step 1 is the most important part of the process. Your broker needs to cast the net wide to a variety of potential buyers to build maximum interest in your business. This step involves a comprehensive and highly confidential marketing process to help identify a range of potential buyers. This is followed by heavily qualifying these buyers and supporting you during the negotiation of offers with the potential buyers. Only when all aspects of the offers are understood and agreed, would you agree to one offer and progress to step 2.

Step 2

Pushing the Button
After receiving an acceptable offer from one potential buyer, this is where you would decide whether or not you feel it is the right time to sell. You would have every right at this stage to decide that you would like to: wait for a different offer, delay the process for a few months, or come back to selling in a few years. However, if you were ready to push the button and formally commit, you would proceed with Heads of Terms. Once the Heads of Terms have been negotiated and agreed, with the right management and focus you would be on the right path to a successful completion, subject to the due diligence and legal process.

The one piece of advice we give to all business owners who are considering their exit options, is give yourself more time than you think you need. Engaging a broker doesn’t mean you’re on the home stretch and the business will be sold over the upcoming months. It actually means you’re getting the ball rolling and putting your business in the best position to secure the right deal. We can’t predict the future, but we can plan for it.

Have you kissed enough frogs?

Have you kissed enough frogs?

Have You Kissed Enough Frogs?

Selling your business for maximum value can be a long process and is fraught with potential pitfalls. Trying to find a buyer for your business is not unlike trying to find a prince among a sea of frogs!

The days of selling your business fast and walking away on the same day are long gone for all but the very smallest and simplest businesses. For the rest of us there will be an agreed handover period of 6 months or more, working with the new owners, and having to get on!

Finding a buyer that you can work with in a positive way is as important as getting the right price for your business and you’re going to have to kiss a lot of frogs before you find your prince!

Always engage the services of a professional broker. A proprietor who is his own business broker has a fool for a client1. It is an unfortunate fact that most people that enquire about most businesses do not ever progress through more than one or two rounds of the process.

Whittling down the plethora of time wasters to a handful of genuine buyers requires a detachment and objectivity that is virtually impossible for the business owner to maintain, while still trying to run the business and generate as many opportunities to meet potential buyers as possible.

All business brokers that work in a proactive way will charge fees, and these will vary slightly, but this price variation is immaterial to the importance of choosing the broker that you can trust, understands what’s important to you, can work well with, and has your best interests at heart while securing you the best deal valuation from your business exit strategy.

At Vexus Corporate we are used to kissing frogs; it’s one of the most important things we do.

Importance of an independent business valuation

Importance of an independent business valuation

If you’ve worked your business up from the ground, the chances are that you’ll know everything about it – in terms of profits and losses, numbers of staff, business practices and codes of conduct. However, if you were asked for the total value of your business, would you have an answer ready?
Consider the possibility that you may wish to sell your business in future. Perhaps you’ve been asked to partner in an exciting new venture, or you’ve set your heart on moving abroad? You may simply want to spend more time with your family. Whatever the reason, an accurate independent business valuation can make the process of selling a business far less stressful, and much more likely to succeed. Conversely, a business valuation could even change your mind about selling – so it’s an essential task if you’re considering a change.

The business valuation process is complex, based not just on your bottom line profits, but a multitude of figures and factors – both quantitative and intangible. For this reason it is recommended that you consult several accountants or business brokers before any negotiations or discussions, to ensure you have a comprehensive and objective figure for the value of your business.

In terms of quantifiable and measurable data, an accountant or business broker will compile a broad overview of your financial situation, including a history of any profits or losses, overall revenue, and cash flow. On top of this, the value of your existing stock and any owned properties, like warehouses or shops, will be taken into consideration. Finally, the value of any company vehicles, equipment and fittings can be calculated and taken into account.

Other factors, which are less measurable but just as significant during the business valuation, also help to provide an accurate picture of your company’s value. Financial figures provide an objective and useful insight into material value, but they are irrelevant when we consider a company’s reputation and their image. Therefore, business brokers will often analyse the general public’s reception towards a business when completing a valuation. Relationships with both customers and suppliers will be considered, as will the success of any competitors. During the business valuation, accountants or brokers may also consider the likelihood of potential threats or opportunities on the horizon, like changes in regulations or new government initiatives.

With so many factors affecting the value of a company, sometimes different brokers or accountants will produce highly varied figures during their business valuation. For this reason it can be useful to visit several, to eliminate any anomalies and provide you with a more in-depth insight into the potential value of your company. Knowledge really is power when it comes to selling a business, and with an accurate sense of the value of your business, you ensure that you won’t waste your time with unrealistically high expectations, or spend years regretting the decision to sell too low.

Who might buy your business?

Who might buy your business?

Find a buyer for your business

If you have a business and are considering selling, you may be interested to know the different types of buyers who might buy your business. Identifying what drives different types of buyers is an integral part of the marketing process of your business. Buyers typically fall into one of the following categories:

Private Investors

These people invest in a private enterprise and do not have a fulltime involvement.

Trade Buyers

These people are typically competitors in the same industry. They believe that by acquiring a larger customer base they can reduce costs and improve operating efficiencies.

Existing Management

This is known as a ‘management buy out’ (MBO). This is where the management wish to take over the business, therefore raise funds from elsewhere to buy out the company they work for.

Private Equity Funds

These are firms / investment groups whose sole purpose is to purchase companies with strong growth prospects.

Job Buyers

These are people looking for a smaller company, which they intend to run as owner managers.


This is where the business is sold or transferred to another family member.


This is where a larger company wishes to make an acquisition for strategic reasons, e.g. obtain new product skills or services they do not currently have.

When selling your business always research the entire process and consider which of the above you feel might be the best route and have the most beneficial outcome when selling your business.

Contact Vexus