14 Jul 2021 7:59 AM

One of our corporate clients came to us in April 2021 after they had received an unsolicited approach from a supplier to purchase their business. Our client’s business was in a specialist retail sector.

The supplier was keen to expand into the UK directly, but our client had market dominance such as to be a real barrier to entry, hence the offer.

Our client’s business is very successful, generating strong and consistent profits and, since incorporation, had remained a close-knit family-run business, currently headed by its founder.

Due to the unsolicited approach our client was in no need to sell and so took the unusual approach of stating upfront a minimum price that could be acceptable to the potential purchaser.

This was primarily because they recognised that a sale would take up a lot of senior management time and focus that would be better spent elsewhere if the approach were not serious.

Clearly this is not a style we would normally adopt!

As a result, the pre-indicative offer information supply was more stringent than would otherwise have been the case.  Meaning that the offer when made was firm, but it did also allow for us to assist in gaining traction with a further potential purchaser, introducing an element of competition.

The benefit to our client was that a very carefully considered and detailed indicative offer was made, without anywhere near the expenditure of the management time nor professional advisor costs that would be entailed in getting to a share purchase agreement.

When the offer was made, whilst it totalled the minimum stated price for the sale,  the terms and earn-out conditions were such as to not make it realistically viable and we were able to advise that the best course of action would be to abort the process.

If you require any advice regarding buying or selling a business, please do contact us.