Are you Really Aware of What you Could be Giving Away?
By David Langstane
The ongoing dispute between fragrance entrepreneur Jo Malone and beauty giant Estée Lauder has brought a fascinating and often overlooked dimension of business sales back into sharp focus. Beyond the headlines, the story raises a question that any founder considering an exit should sit with carefully: when you sell your business, what exactly are you handing over?
Jo Malone built one of the most recognisable luxury fragrance brands in the world before selling it to Estée Lauder. She has since spoken openly about the sense of loss that followed, and the restrictions the deal placed on her ability to operate freely within the industry she helped shape. It is a cautionary tale that resonates far beyond the world of high-end perfumery.
To explore the legal and personal implications, we spoke to Liam Reilly of Glasgow-based solicitors Holmes Mackillop, who specialises in commercial and employment law.
“The present situation involving Jo Malone and Estée Lauder serves as a strong reminder that selling a business can be a surprisingly personal experience,” Reilly says. “What a seller — particularly where that seller is the founder — considers to be the most valuable assets of a business can often be the least tangible.”
That intangibility is precisely what catches many founders off guard. A brand built over years of hard work becomes inseparable from the person behind it, and no balance sheet can fully capture that connection.
“Where a seller has applied significant time and effort to nourish and grow a particular brand, this brand will likely be inextricably linked with the identity of that seller,” Reilly explains. “Letting go of this when deciding to sell their company is therefore not solely a financial decision. The seller may undoubtedly feel like they are giving up a part of themselves, alongside the bricks and mortar of their business.”
From a purely commercial perspective, most business sales appear straightforward enough — shares transfer, assets change hands, and a price is agreed. But experienced practitioners know the real substance of a deal is often found in the detail, particularly in restrictive covenants and intellectual property arrangements that can fundamentally shape a seller’s professional future.
Reilly is clear on where sellers most commonly come unstuck. “From a legal perspective, this underlines the necessity of considering not only the sums being offered, but also the long-term implications of the obligations they are agreeing to. Clauses that deal with post-sale restrictions and IP rights should therefore not be simply glossed over as technicalities, but instead should be at the forefront of the seller’s mind, given the profound impact they can have on the seller’s ability to operate freely in the same space going forward.”
Restrictive covenants — which typically prevent a seller from launching a competing business, joining a rival, or approaching former clients and staff — are a standard feature of most corporate deals. They are usually time-limited and geographically defined, but their reach can be broader than sellers anticipate, and courts have shown a willingness to enforce them robustly where the drafting is sound.
For founders whose personal brand and expertise are central to the business they are selling, these provisions can amount to a significant constraint on their working life for years after the deal is done. The Jo Malone situation is an extreme and high-profile example, but the underlying dynamic plays out in boardrooms and deal rooms across Scotland every year.
The solution, according to Reilly, lies in early and open engagement with the detail. “Being aware of these obligations and having conversations as to their scope early on can make a huge difference, helping to avoid any sense of regret once the dust has settled and the deal is already signed and sealed.”
In Case You Missed It:
For any founder weighing up an exit — whether selling to a trade buyer, a private equity house, or a management team — the message is consistent: understand the full picture before you sign. The financial reward of a successful sale can be considerable, but so too can the cost of overlooking what you are giving away along with it.
Disclaimer: This article is intended for general informational purposes only and does not constitute legal advice. Every business sale is different, and the legal implications will vary depending on your individual circumstances. If you are considering selling your business or have questions about any of the issues raised in this article, you should seek independent legal advice tailored to your specific situation.
