Sale of National HGV Driving School, Securing Deferred Consideration
Sale of Business with Secured Deferred Consideration, What This Means for Sellers
We recently advised on the sale of a national HGV driving school for a seven-figure sum, acting for the seller. The transaction was led by Senior Associate Marco and Associate Harrison from our Corporate team and involved careful negotiation, drafting, and strategic risk management throughout.
A key feature of the deal was deferred consideration payable after completion. Where a buyer is funded (or has existing lending arrangements), seller protections need to be structured so they are compatible with lender requirements and deliver meaningful security in practice.
We therefore negotiated the deferred consideration mechanics alongside the funding and security package, and prepared standalone security documents to protect our client’s post-completion payment rights. The documents were then registered to ensure enforceability and priority as agreed.
What this means for your transaction
If you are selling a business on terms that include deferred consideration, the headline price is only part of the picture. Seller risk is driven by:
How (and when) deferred sums are triggered and paid;
What security is actually available once lender requirements are taken into account;
Whether the buyer has the right to withhold deferred consideration or utilise a set-off clause against the purported value of a breach of warranty claim;
How priority, enforcement and practical recoverability work if there’s a dispute or non-payment.
Cost expectations and planning
Deals involving deferred consideration and security documents typically require additional drafting, negotiation and coordination with funders. This is also a point that is often overlooked during the negotiation phase, with prospective buyers then surprised and often uncomfortable with requests to give proper security to the seller for deferred consideration, such as a personal guarantee or debenture. We flag these moving parts early so that all parties can make informed decisions on the structure of the deal and understand where the real risk is, and the legal teams involved know from the outset which documents need to be drafted.
When to involve us
We’re usually engaged where deferred payments, funding constraints and security priorities need to be managed carefully, particularly in mid to high-value transactions, but can add value whilst the deal is still being structured to ensure the difficult questions are answered before all parties push the button, preventing deals from collapsing at a later stage.
Has your prospective buyer proposed a deal including deferred consideration?
Before agreeing headline terms, get clear advice on what protections are realistic once funders and security priorities are in play, and how to structure the documents to protect your position.
