Category: Uncategorized

The expansion of ultra-low emission zone (ULEZ) to outer London boroughs. has been ruled as lawful by the High Court.
Five Conservative-run councils had launched legal action back in February over the expansion of the Ultra Low Emission Zone (ULEZ) to London’s outer boroughs.
The scheme will come into force from 29 August and see the drivers of the most polluting vehicles charged £12.50 a day to use them.
The hope of those behind the plan is it will incentivise people to use cleaner transport alternatives and, as a result, help improve the city’s air quality.
And TfL has claimed only a small number of people will be impacted, with nine out of 10 vehicles compliant with ULEZ requirements.
But the councils challenged the roll-out in the courts, saying the capital’s Labour mayor, Sadiq Khan, had exceeded his legal powers with such a large expansion of the scheme.
The four local authorities – Hillingdon, Bexley, Bromley and Harrow in London, plus Surrey County Council – also claimed the consultation on the plan was flawed, and not enough information had been shared over the scrappage scheme, which provides pay-outs to people prepared to ditch their vehicles.
While other parts of the challenge were dismissed in April, the councils were granted a hearing in the High Court, and the two sides fought it out over two days of evidence.
The ruling comes a week after the debate around ULEZ dominated a local by-election and the fall-out from the results.
The seat of Uxbridge and South Ruislip – left vacant by the departure of Boris Johnson – seemed ripe for the taking for Labour in light of recent polling that gives the party a double digit lead over the Tories.
But the Conservative candidate managed a narrow victory – albeit seeing the majority for the party fall from over 7,000 to less than 500 – having turned its campaign into a referendum on ULEZ.
Since then, Labour have been in turmoil over the policy and whether to support it, with Sir Keir Starmer saying he had asked the mayor to “reflect” on the impact of the scheme.
However, Mr Khan has said he is committed to ULEZ expansion, saying: “It was a difficult decision to take. But just like nobody will accept drinking dirty water, why accept dirty air?”
Read more:
London ULEZ expansion legal, High Court rules

Beleaguered Cinema chain Cineworld will suspend its listing on the London Stock Exchange today as it limps on with a restructuring plan to reduce its massive mountain of debt.
The British chain revealed it would file for administration and stop trading on the exchange last month as it creaks under the weight of a huge debt pile built up before the pandemic.
The firm had disclosed a net debt of about $8.8 billion, according to its latest results at the time.
Bosses said administrators, once appointed, would shift all of its assets to a wholly owned subsidiary called Crown, and a newly incorporated company controlled by the group’s lenders will become the sole owner of Crown, with Cineworld ceasing to have any interest in the parties.
In a statement this morning, bosses said the firm had also struck a new $250m credit deal to help finance its turnaround plans.
“The restructuring, when implemented by way of an administration process, will transform the Group’s balance sheet and provide it with significant additional liquidity to fund its long-term strategy,” Cineworld said.
The firm claimed a restructuring will involve the release around $4.53bn of the group’s funded indebtedness, the execution of a rights offering to raise gross proceeds of $800m and the provision of $1.71bn in new debt financing.
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Cineworld suspends trading on London Stock Exchange as restructuring plans limp on

The owner of House of Fraser has said it could close more stores, after shutting eight in the past year and declaring “the department store globally is broken”.
Michael Murray, the chief executive of Mike Ashley’s retail empire Frasers, which also owns Sports Direct, the designer street fashion chain Flannels and a plethora of brands from Jack Wills to Evans Cycles, said its department store portfolio was “continually under review” and some outlets were “still too big”. “We have to find solutions for the excess space,” he said.
House of Fraser has already almost halved in size from 59 stores to 31 since it was bought out of administration by Ashley’s retail empire in August 2018. Murray said that historically stores would have been 150,000 sq ft or larger, which was now “too big” and meant that in the past they “didn’t have the investment” they needed. The group now wants stores of about 50,000 sq ft or smaller.
House of Fraser’s latest closures follow a trend of decline for traditional department stores, with the UK’s Debenhams chain now online-only after collapsing into administration in 2019, while Beales is reduced to just a handful of stores after going bust in 2020. John Lewis has shut 16 stores since 2020, leaving it with just 34, while Fenwick is to shut its flagship London shop on Bond Street next year after 130 years of trade.
Murray’s comments came as Frasers reported that pre-tax profits for the group almost doubled to £660m after sales rose 16% to £5.6bn in the year to 30 April.
Sales at the group’s premium division, which includes Flannels and House of Fraser, rose 5.7%, before acquisitions, but the division sank to a loss of £100,000, from a £10.5m profit a year before, after losing business rates relief and taking a £19.8m hit from store closures.
Sales at the core Sports Direct chain were virtually flat year on year, excluding acquisitions, but profits more than doubled to £447m as the group said a better relationship with the key brand Nike and other labels had helped it improve profit margins while it made additional profits on property disposals.
Frasers’ sales were helped by a slew of acquisitions, including the online specialist Studio Retail and several brands from JD Sports. Murray indicated there would be more to come.
He said the group would continue to build stakes in listed companies as that was important in moving relationships forward. “Everyone can talk about trying to drive a strategic relationship but if someone doesn’t put their money where their mouth is and take the first step then [nothing changes]. When you own 10% to 20% everyone’s focused to make things happen. You are having conversations,” he said.
While he would not comment on Frasers’ plans for specific companies, Murray added: “There’s going to be opportunities and we are well placed to capitalise on them. We have a strong industry leading platform for helping these businesses and taking benefits for our business.”
The company said it expected to make up to £550m in underlying profit in the year ahead despite a tough consumer environment as it would be “staying focused on cost inflation”.
That would be a step up from the £478m of underlying profit in the year to April, which came after excluding one-off benefits including a £55.2m gain on the acquisition of some brands from JD Sports and £17m related to the sale of a stake in Kangol.
On Thursday, Frasers said it had increased its stake in the online retailer Asos by another two percentage points to 15%. This week it has also upped its stake in the online fashion site Boohoo from 5% to 6.7% and N Brown from 18% to 19%.
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House of Fraser owner could close more big shops as department store model ‘broken’

Top business groups have welcomed government plans to speed up the planning process for key infrastructure projects as a “major signal” on green growth.
Ministers want to overhaul the system and create a new fast-track route for major schemes, such as offshore wind farms, transport connections, waste facilities and nuclear power stations.
Prime minister Rishi Sunak said: “Significant infrastructure projects don’t just ensure people can get to work easily, do their recycling, and power their homes.
“They also create jobs, grow our economy, and help us become fit for the future.”
And the idea – now subject to a consultation until mid-September – has been broadly welcomed by business bodies.
James Watkins, London Chamber of Commerce and Industry (LCCI) policy lead, said: “We need to speed up planning processes to get the infrastructure we need, from secure energy grids to 5G.
“Britain cannot afford to be in the slow lane. For too long, major decisions on key projects including transport have taken years, whilst our international competitors rush ahead.”
While Jane Gratton, from the British Chambers of Commerce, said firms were put off the planning system by “long delays, complexity and uncertainty” leading to higher costs and lack of investment.
She said: “We need a faster, streamlined system to deliver vital infrastructure the economy needs, enable local communities and businesses to prosper, and support the transition to net zero.”
And John Foster, interim policy director at the Confederation of British Industry (CBI) added: “With planning delays cited by a number of firms as a significant barrier to green investment, streamlining processes would represent a major signal of intent about the UK’s status as a leader in green growth.”
But he warned ministers should go further, stressing “bolder thinking” and as “fundamental reset” was needed for the UK to be a world leader in the built environment.
Housing secretary Michael Gove said reforms would be “vital” to deliver major infrastructure projects
It comes after he set out measures on Monday including on leasehold reform, simplifying planning procedures, expanding planning capacity, and regenerating and reviving inner cities.
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Business groups welcome plans to speed up planning process for big infrastructure projects

Mastercard has said financial payment companies must stop allowing US customers to buy legal marijuana in shops with its debit cards.
Because marijuana remains illegal at a federal level in the US, customers in the 38 states where it is allowed are usually forced to pay in cash.
Mastercard said the move comes after it found some shops accepted debit payments despite the federal ban.
Marijuana advocates have called for new laws to ease sales of legal cannabis.
“As we were made aware of this matter, we quickly investigated it. In accordance with our policies, we instructed the financial institutions that offer payment services to cannabis merchants and connects them to Mastercard to terminate the activity,” Mastercard said in a statement on Wednesday.
“The federal government considers cannabis sales illegal, so these purchases are not allowed on our systems,” the statement continued.
The crackdown aims to stop marijuana businesses, known as dispensaries, from offering the option to customers of paying with a debit card after entering their account’s PIN number.
Marijuana is currently legal for medical use in 38 states. It is also legal for adults over 21 years old to buy for recreational use in 23 states, including Washington DC and the entire US West Coast.
In Canada, where cannabis was legalised on the national level in 2018, customers are often permitted to make payments with credit or debit cards.
Sunburn Cannabis CEO Brady Cobb criticised Mastercard’s decision, saying “this move is another blow to the state-legal cannabis industry and patients/consumers who want to access this budding category”.
The Democrat-controlled US Senate is hoping to pass a law that would make it easier for cannabis businesses to interact with financial institutions.
But earlier this month, top Republican Senator John Cornyn described the bill’s passage as “wishful thinking”.
Read more:
Mastercard bans cannabis shops stop accepting debit cards

When the phrase ‘quiet quitting’ started popping up amid the COVID-19 pandemic, employers and the media were trying to understand why some workers seemed to be putting in less effort than expected and only doing the minimum required.
Susanne Lund, CEO at Airtame explains that while many factors can influence this behavior, a common refrain from workers today is that many employers deploy rigid structures that contradict modern expectations for flexibility, affecting both engagement and company culture. Whether an individual’s quiet quitting is driven by mandatory attendance policies or reluctance to embrace new tools and technologies, the effects on a business’ efficiency and bottom line can be significant.
Quiet Quitting Isn’t a Fad
The tendency of some workers to become disillusioned by their workplace culture or the work itself is not a new phenomenon, but its impact today may be greater than any time in modern history. In Gallup’s State of the Global Workplace: 2023 Report, the research firm found that workers who have disengaged from work and lack supportive bonds make up nearly 60 percent of the workforce, costing the global economy up to nine percent of GDP, or roughly $8.8 trillion.
The same study found 44 percent of employees reported feeling stress during “a lot” of the previous day, while purporting that employee engagement has 3.8 times greater influence on employee stress as work location. Even more stark was the self-reported solution: 41 percent named “engagement or culture” as the most significant change that would improve worker appreciation and engagement, beating out “pay and benefits” at 28 percent. This follows the 2022 American Opportunity Survey from McKinsey that revealed 87 percent of workers take the opportunity to work remotely at least one day a week when offered, reaching industries as varied as finance, media production, information technology, engineering, social services, educational instruction and healthcare.
These findings support the idea that workers see more benefit than harm from remote work, but don’t help provide a specific solution to improve engagement among flexible workers. Based on our collective experiences, there appears to be one clear tactic to address these challenges in a way that supports all parties’ end goals, and it relies on embracing technology.
Technology is a Catalyst for Community
For many workers and some employers, the rapid need for alternate work arrangements during the COVID-19 pandemic proved that traditional 9-5 office schedules aren’t the only way to operate, or even necessarily the most efficient or productive. Companies of all kinds and all sizes rushed to implement policies and tools to enable remote work in order to protect employees’ health and ensure reliable staffing and operations, with workers often expected to maintain performance levels and adjust to new remote procedures with little guidance.
The technologies being deployed to support this transition vary widely from home office equipment and cloud-based computing solutions to new virtual collaboration and in-office meeting room tools. Regardless of the specific solutions, many leaders and employees noticed a disparity in meeting experiences and outcomes between in-office and remote attendees, signaling a need to improve meeting equity so each individual enjoys the same level of engagement and participation regardless of location or work arrangement.
Equally important was the need for companies to adopt user-friendly technology solutions in-office to support the great return. When workers began returning to in-person work in earnest, some found that the workflows and processes they used at home conflicted with the tools provided in conference rooms, essentially requiring them to use different procedures when working from each location, hindering flexibility and morale.
The pace of technology moves quickly, however, and early adopters have already succeeded at improving experiences by streamlining meeting simplicity with BYOM (Bring Your Own Meeting) spaces, which allow workers to easily host meetings from their own devices while leveraging the full power of the room’s professional-grade audio and video components.
Refusing to Adapt Can Cost Top Talent
While there are some big-name corporations attempting to rescind flexible work policies and plenty of public discussion about who gets to work remotely, what’s obvious is the leverage these shifts can provide for workers when negotiating contracts or pushing for policy changes. In a competitive sense, an applicant choosing between two positions may have incentive to choose the more flexible role or company, even if the more rigid one offers better pay.
The same is true for existing employees who lean into quiet quitting; each day they feel unsupported and disengaged is another day of lost productivity, in addition to eventually causing some to truly quit. Additionally, as the labor market tightens, individuals with highly specialized or valuable skills can demand specific conditions or benefits, including workplace flexibility or more supportive in-office technology infrastructure.
If workers prove they can maintain productivity regardless of location, employers who support them with new tools and are open to discussions about company culture can limit or eliminate the threat of quiet quitting. By being responsive to their needs and expectations, even when compromises are required from both sides, leaders can help increase engagement of their workers and reinvigorate the mutual respect necessary to retain a passionate workforce.
Read more:
Can Collaboration Technology Help Prevent Quiet Quitting?

The Barbie movie, it’s everywhere – from social media memes to the temporarily-renamed Barbie-can Centre.
Praised for its witty marketing and seemingly endless barrage of promotions leading up to the release date, Barbie has now grossed over $400 million worldwide after less than a week in cinemas. The movie’s extremely successful marketing campaign has seen the movie achieve the highest opening day sales of any movie this year.
While it’s undeniable that Barbie’s massive $100 million marketing budget played a part in the triumph of these campaigns, the real genius lies in the strategies utilised by Barbie’s marketing team; building meme generators and social media filters, pushing brand identity and nostalgia-marketing, and getting people involved in their interactive campaigns – strategies that are equally relevant to SMEs.
Marketing is a powerful tool that can boost brand awareness and attract new customers, and there is a lot that business leaders can learn from the overwhelming success of the Barbie movie’s marketing attempts.
Connor Campbell, business expert at NerdWallet comments: “There is no doubt that the Barbie movie has seen some of the most effective marketing in recent years. Opening to staggeringly high box office numbers, the movie has been able to transfer its marketing virality into direct sales – something that is equally desirable for small businesses in the UK.
“The secrets to the movie’s success lay in the marketing team’s ability to create a ‘moment’ that masses of people want to be part of. By playing to their strengths of pushing the strong identity of Barbie as a brand – utilising hot pink and iconic fonts, alongside appealing to nostalgia – the Barbie marketing team have generated significant buzz and anticipation ahead of the movie’s release.
“While SMEs are unlikely to have the budget potential that the Barbie team were given, these are all methods that can inspire the way in which small businesses market themselves and build brand awareness in the wider public – optimising the power of social media virality to build interactive campaigns that people want to participate in.”
Connor has shared the following tips to help businesses take inspiration from the Barbie marketing victories:
Create interactive social media content
One of the main reasons that the Barbie movie hit such high levels of viral popularity is through their strategic use of interactive social media content. This has taken the form of meme generators – such as the ‘This Barbie is a…’ generator that allows users to transform photos of themselves into Barbie-themed posters, and the Barbie-related filters on TikTok and Instagram.
By directly getting people involved and providing them with a ‘memento’, this encourages them to want to take part. This can be in the form of creating a filter or sound that others can use to create their own pictures or videos, or could even be done by jumping on pre-existing trends and giving them a twist that relates to your business.
Social media is a great way for businesses to promote themselves to a wider audience, and creating interactive campaigns increases the chances of going viral – particularly on platforms such as TikTok that are known to have a very user-friendly algorithm.
Brand identity is key
The Barbie movie utilised a wide range of marketing strategies – from social media to offline collaborations with other brands across different industries. However, what tied all of these together was the consistency of Barbie’s brand identity.
Over the years, Barbie has become synonymous with its hot pink colour palette and instantly recognisable font. These elements have been carried across each of the marketing tactics used, and mean that people can immediately recognise trending content as being Barbie-related.
In a similar way, businesses can ensure that they have a strong brand identity of their own. Whether this is through having an instantly recognisable logo, or carrying across a core colour palette in everything you do. Every marketing campaign – whether it’s large-scale billboards or simple Instagram posts – should carry across these elements of brand identity to make your business synonymous with these factors.
Building up to a “main event” while maintaining an event
In Barbie’s case, the “main event” was always the release of the movie in cinemas. Everything the marketing team did up until this point was solely to generate buzz for the main attraction. In this way, businesses should optimise their marketing efforts in the lead-up to a new product or service launch, hinting that something big is coming, and focusing their attention on creating traction for the launch.
However, where the Barbie movie marketing team really excelled was in making the build-up just as much of an event as the movie release itself. The general public knew that the movie was being released on the 21st July, but they were equally as invested and excited about what the movie’s marketing team were doing now – prior to the launch.
Businesses can use this same strategy to make their business more exciting to a wider audience. By putting out frequent social media posts, trending hashtags, and generating conversations in the build-up to the launch of a new venture, businesses can capitalise on this tactic to create two “main events” – one now, and one when the launch takes place.
Making nostalgia-marketing work for you
Nostalgia is an extremely powerful emotion that can be used to appeal to potential consumers. By relating to them and relaying shared memories, businesses can create positive associations with their target demographic. For the Barbie movie, the brand itself is a nostalgic household name for multiple generations. However, this doesn’t mean that small businesses can’t still utilise nostalgia-marketing for themselves.
The secret to successful nostalgia-marketing is really understanding your audience. Identify a core demographic that you’re aiming to target, and make sure you fully understand their core cultural and historical background from their childhood or early adulthood.
If your small business has a lot of history itself, you may be able to incorporate elements from your brand history that overlap with this era. If not, there are still other ways to incorporate nostalgia into your marketing. This could take the form of creating a nostalgic hashtag to use for your social media posts, or launching a limited-time deal that is relevant to an event that took place that month, week, or even day in history.
Read more:
Business expert shares top tips SMEs can learn from the Barbie movie marketing team

Recent research into the impact of the cost-of-living crisis on UK employees revealed that women were less likely than men to have requested a salary increase this year despite being equally affected by rising living costs.
Of the 1,000 people polled by HR software provider Ciphr last month, just one in four women, compared to one in three men, had asked for a pay rise. Women were also shown to be less likely to have asked for a cost-of-living bonus, for a promotion, or for more employee benefits to top up their income.
Yet, conversely, it is female employees that are the most likely to say they can’t afford to take sick leave, the most likely to report feeling overwhelmed by the stress of money worries, and the most likely to think that they are not being paid enough.
Less than half of the women surveyed think that what they’re being paid adequately reflects the value they bring to their organisation with their skills and experience or what they do for their employer in terms of their role and responsibilities.
In comparison, half of the men surveyed do feel adequately rewarded for their efforts, with 49% agreeing that their salary reflects their skills and experience, and 51% that it is reflective of their current role and responsibilities.
While these findings only highlight a marginal difference in how men and women perceive their salary, there is a significant disparity in how people act on these perceptions around their salary expectations. Of those men who are discontent with their pay – because, in their opinion, it doesn’t match their skills, job knowledge or position – nearly half have asked for a raise recently. Just a third (32%) of women who feel the same way have done the same thing, and asked for a pay rise.
Even men who can’t decide if they are being paid fairly or not are still, statistically, more likely to ask for a pay rise than women who know that they are unhappy with their wages (38% vs 32%) – a notable gender ‘ask gap’ (where women ask for, or expect, lower salaries than comparable men) which could be compounding existing pay gaps at many organisations.
It pays to ask
Not every employee who asks for a bump up in salary will get one. But, as previous Ciphr research has illustrated, it does usually pay to ask – with those who push for higher earnings found to be more likely to be awarded a pay rise than those who are reticent to negotiate a salary increase.
Since fewer women, than men, have asked for a pay rise recently, according to Ciphr’s cost of living survey, it’s reasonable to infer that more men, than women, may have received a pay rise recently. If this outcome is the case, then disproportionately more women, than men, could continue to be negatively affected by the impact of the cost-of-living crisis – as their wages fall in real terms compared to inflation. The UK’s gender pay gap could also widen further.
As it currently stands, the latest figures from the Office for National Statistics’ Labour Force Survey continue to show a sizable pay gap between what the average man working full-time in the UK earns, compared to the average woman (it’ll be three more months until the ONS’ official annual gender pay gap statistical bulletin is released).
In the first quarter of this year (January-March 2023), the mean (gross) pay for full-time male employees was £801 a week (or £19.09 an hour). Full-time female employees were paid nearly £140 less a week, on average – at £662 (or £16.04 an hour). This works out to a 16% gender pay gap, which means that, on an hourly basis, women earn 84p for every pound earned by a man.
Although this gap is lower than in the same quarter in 2022 (down from 17.4%), Ciphr’s analysis of the ONS data shows that women’s hourly pay still lags men’s hourly pay in nearly every industry. And, women working in the private sector have to contend with a bigger pay gap than those in the public sector (18% vs 13.8%).
Pay gaps vary from 2.1% for administrative and support services workers up to 18.7% for those employed in financial, insurance and real estate activities (the highest is 20.5% for businesses categorised as ‘other services’). Construction is the only exception here, as it has a negative (mean) pay gap of -7.5%, which means that, as an industry, it pays its full-time female employees more on average per hour than its full-time male employees.
Notably, between the first quarter of 2023 and the first quarter of 2022, seven industries (of the 15 listed in the chart above) increased the hourly rates of their female employees by a greater percentage than they increased the hourly rates of their male employees. Seven other industries, however, did the opposite, with men benefiting from higher pay growth than women. Either way, the gender pay gap remains far from zero (and even further away in some cases).
More needs to be done to close the gap
Claire Williams, chief people officer at Ciphr, says: “Much has already been written about how the salary ‘ask gap’ can contribute to pay inequality. It happens when people, usually women, sell themselves short by accepting a lower salary than they are perhaps ‘worth’, because they perceive the salary they are being offered as fair. Or, as highlighted by Ciphr’s latest research, they don’t ask for a pay rise at all – even if they are unhappy with their wages – maybe because they don’t feel confident, or encouraged, in asking for a higher salary.
“These employees then potentially end up being paid a lower market rate – sometimes compounded over years – than they should be, compared to others with similar skillsets, qualifications, and experience. This isn’t good for them, or, in the long-term, their employer, because people who don’t feel valued are much more likely to be looking elsewhere for a new job. And, until this cycle is stopped, it will keep perpetuating pay gaps.
“The onus is on employers to do more to fix this. As the latest ONS earnings figures show, disappointingly, the gender pay gap is still as wide as ever in many industries. Employers must be held accountable for doing what they can to reduce salary discrepancies – where they see them – within their organisations to ensure that all employees are being fairly financially rewarded for their efforts, and the value they bring to the business. Better representation of women and ethnic minorities at all levels, in all roles, is a vital part of driving this change and achieving pay equality. It’s also the best way of attracting and retaining the best employees long-term.”
Read more:
‘Underpaid’ women less likely than men to ask for a pay rise

For a founder or seller, the sale of a SME business will be one of their key life events.  For a buyer it can be a springboard to a faster growth rate.  In recent months buyer and seller expectations have changed in relation to SME transactions.
Francis Dalton, Corporate Partner at national law firm Freeths, explains that :It is now taking an average of 12 months for transactions to complete leaving buyers and sellers in limbo.  In this article our Corporate experts identify some of the frequently occurring gaps between seller and buyer expectations in Small and Medium-sized Enterprise (SME) transactions and methods of addressing them to determine the best possible outcomes for both parties and to reduce transaction timetables.
Price
Price can often become the main point of disagreement during negotiations because the seller and the buyer rely on different approaches when valuing the business. Sellers have become accustomed to higher multiples and in some cases valuations based on future earnings.  As the economy has tightened, pricing from buyers has dropped and this has led to lower multiples.
Multiples
Multiples, which is a commonly used price metric, works on the basis that a company is worth several times its profits (EBITDA) or its revenue.
For some tech firms, revenue multiples (or annual recurring revenue) have been the basis of valuations as part of the market for a few years.  However, where these were once closer to 6 times, now they are more settled around 3 or 4.  For non-technology assets, it is more common to see a multiple based on EBITDA.  Again, these are sector specific but have reduced in recent years.
When choosing between profit-based and revenue-based multiples, it is crucial to consider the specific characteristics of the SME, the industry in which it operates, and the transaction context. Some additional considerations include:

whether the SME has consistent and predictable profit margins, if it has then profit-based multiples may provide a more accurate reflection of its value. However, if profitability is low or volatile, revenue-based multiples may be more appropriate; and
whether the SME is in a growth phase with significant revenue expansion potential, if yes, revenue-based multiples may better capture its future value. Conversely, profit-based multiples might be more suitable if the business has stable or declining revenue but is capable of improving profitability.

Working Capital Targets
Most transaction required that the Seller leaves the business with a normal of working capital in the business.  However, agreeing on what counts as a normal level of working capital is often a source of disagreement.  These disagreements typically arise due to differences in perspectives regarding the appropriate level of working capital that should be included in the transaction. For example, disagreements can arise regarding the treatment of cash, accounts receivable, inventory, or accrued liabilities and the period over which the target should be set.  In a recent transaction, this resulted in a difference in the price of over £1m and ultimately caused the transaction to fail.
When a disagreement in relation to the working capital targets occurs, it is important to have clear and open communication between the parties. Efforts should be made to understand each other’s perspectives and work towards a mutually acceptable resolution.
Earn-out provisions
Earn-out provisions are often used to bridge valuation gaps and align the interests of the buyer and seller as these are payments usually contingent on the business’s future performance.  Of course, a buyer will look to put as much of the overall consideration as contingent on the businesses’ future performance as possible whereas sellers will want more money up-front.
It is generally advisable to exclude the impact of uncontrollable external factors from earn-out provisions. For example, economic downturns, changes in industry regulations, or unforeseen market conditions can significantly affect business performance. Excluding these factors from the earn-out calculations ensures that the outcome is based on the performance within the control of the buyer or, more commonly, a seller/founder who is remaining in the business.
Earn-out provisions should be designed to focus on the performance of the specific business being acquired rather than general market conditions. Both parties should agree that earn-out provisions should not be subject to financial engineering or accounting manipulations. This ensures that the earn-out payments are based on the genuine performance of the business rather than artificially inflated or manipulated financial figures.
Earn-out provisions should be drafted with clarity and precision to avoid ambiguity or misinterpretation. Clear definitions of performance metrics, milestones, and calculation methodologies should be included to minimize the potential for disagreements and disputes in the future.
It’s worth noting that the specific exclusions or considerations for earn-out provisions can vary depending on the unique circumstances of the transaction and the preferences of the parties involved. It is strongly recommended that both the buyer and seller consult with experienced professionals, such as legal advisors, to ensure that the earn-out provisions are fair, balanced, and accurately reflect the intentions of both parties.
Liability Caps
In SME transactions, a seller will make a number of promises about the state of the business to the buyer (known as warranties).  In the event that the these are untrue, the seller will be liable to the buyer for the loss.
It is normal for this loss to be capped but the level of this cap is a point of contention.  Historically sellers have got used to caps of 20%/30% of the consideration whereas buyers will want to make sure that they have protection for the entire consideration amount.
Ultimately this will come down to how comfortable a seller is with the business that they are selling.  Many sellers will say that they know their business and are comfortable giving the warranties.  In other circumstances, the parties may seek warranty insurance protection to bridge the gap.
Basis Liability
In SME transactions involving multiple founders or shareholders, the allocation of liability can be structured in different ways. Two common approaches are joint and several liability and several and proportionate liability.
Joint and Several Liability
Joint and several liability means that each founder or shareholder is individually responsible for the full extent of the liabilities of all founders. In case of a breach or financial obligation, any one founder can be held fully liable for the entire amount, even if other founders are unable to fulfil their share of the liability. If one founder has the means to satisfy the liability, it ensures that the affected party can recover the full amount owed. This approach can provide a stronger level of protection for the buyer but it can seem unfair to sellers who don’t feel that they should cover the liability of their co-founders.  However, where a buyer insists on this approach the co-founders are able to regulate the position through an agreement between themselves.
Several and Proportionate Liability
Several and proportionate liability means that each founder or shareholder is responsible only for their respective share of the liabilities based on their ownership or agreed-upon proportion (i.e. if they have 30% of the shares they are liable for 30% of the claim).  This approach is preferred by sellers but it can leave Buyers exposes of required to bring claims against a number of people which is costly and time and consuming.

The choice between joint and several liability and several and proportionate liability depends on several factors, including the specific circumstances of the SME transaction, the relationship and trust among the founders, the financial capacity of individual founders, and the preferences of the parties involved. In some cases, a middle ground can be reached by incorporating a combination of both approaches. For example, certain liabilities may be subject to joint and several liability, while others may be subject to several and proportionate liability.

Next Steps
In conclusion, bridging the gap between seller and buyer expectations in SME transactions requires a win-win approach. Both parties must be willing to compromise on key issues and understand each other’s positions to arrive at a mutually beneficial agreement. With proper preparation and open communication channels, the likelihood of a successful deal increases. It is important for both seller and buyer to consult with legal professionals who specialise in corporate law and SME transactions due to the complexities and potential risks involved. If you have any questions relating to a SME transaction or you’re contemplating embarking on a sale or acquisition, please get in touch with Francis Dalton.
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How to bridge the gap between Seller and Buyer expectations in SME transactions?