Advising shareholders on company exits

Advising shareholders on company exits
We have recently acted for various clients on a number of business exits. In some cases, our advice has been directly on the sale process and documents: navigating the client through what can feel like an uncharted sea of due diligence and seeking the best and cleanest terms for their departure. In others, we have advised clients on difficult and contentious issues arising after a business sale. This note is to share some high-level observations.

When it comes to acting for shareholders on a sale, our mantra has been to emphasise the importance of preparation and to understand the negotiating position of the parties. Preparation involves time and the opportunity to truly understand the client’s business and objectives. Negotiation involves knowledge of the other side (in our experience this is generally the buyer). Some knowledge comes from experience: we have acted in enough transactions to be able to anticipate the core needs of financial and strategic buyers. But being able to know what other questions to ask, and to be confident enough to ask them, can make all the difference.

When acting for clients after a sale, we often see the same issue coming up time and again. Our client, often for very good reasons, is due a series of payments. The buyer is reluctant to make those payments as the business changes after purchase and during post-transaction integration. Our role is to protect our clients from factors that are often out of their control and to remind the buyers of the obligations that they accept on taking over a business where the seller expects further consideration for their shares. In these examples, drafting terms that truly reflect the intentions of the parties and the business plan is essential. In order to do that, we often need to go fairly deep into that plan and assess the risks that are inherent in it.

Our mixed practice gives us an advantage in handling these kinds of engagement. Our principals both advise on transactions and also on disputes. This range of experience is becoming far less common among lawyers in the present day. We are certain that our own time as principals in growth businesses gives us a far deeper understanding of real business issues than many of our competitors. And our expertise in handling disputes as litigators gives us a further edge: we know first hand how easy or hard it can be to prove an argument with evidence, and the cost of getting these things wrong.

Although corporate activity has clearly dropped off in recent months with the cold wind resulting from events in Ukraine, the rise in inflation and other sources of instability, it will come back. At MDS Advisory we are always delighted to be able to assist our clients in preparing and then negotiating their exits. If we then need to stand with our clients in resolving disputes that arise after the event, we are invariably willing and able to do so.

Please contact Adam Oliver on if you would like to discuss your business sale or any relevant corporate matter.