An owner deciding how to sell is usually offered two routes. List the business with as many brokers and portals as will take it, or appoint one adviser exclusively for a fixed period. The open route feels safer because it feels like more reach. In UAE owner-operated businesses in the AED 2 to 10 million range, it usually produces the opposite: a business that is seen by too many people, vetted by none of them, and priced by whoever shouts first. This guide explains why we only act on exclusive mandates, what an exclusive mandate should contain, and where an owner should be careful about the terms.
What an open listing actually does
When three brokers and two portals carry the same business, each of them is rational to behave the same way: get it in front of as many people as possible, as fast as possible, and move on if it does not trade. Nobody in that arrangement is paid to verify the numbers, because verification costs time and the broker who spends it risks losing the deal to a competitor who did not. The listing therefore carries the owner's own figures, repeated by several voices, and the same business turns up in a buyer's inbox from three directions with three slightly different descriptions.
Buyers notice. A serious buyer who sees one business offered by several intermediaries concludes that it has been around, has not sold, and carries the owner's opinion of its price. That reading moves the negotiation in the buyer's favour before a document has been opened.
Confidentiality is the first casualty
Most UAE owners we speak to fear exposure more than they fear a low price. Staff, landlords, suppliers and competitors hearing that the owner is selling can damage a business that was perfectly healthy a month earlier. Every additional intermediary holding the name and the numbers is an additional channel through which that information can travel. In a market where introductions pass between people who know each other, that risk is real.
Under an exclusive mandate there is one party responsible for who sees what. Buyers go through a fixed sequence: intake, a signed non-disclosure agreement with identification, proof of funds, and a conversation about their own history of buying or running businesses. Only then does anyone learn the name of the company. That sequence is only enforceable when one adviser controls the process. With several advisers, each runs its own version, and the weakest one sets the standard.
Underwriting needs time the adviser can only afford under exclusivity
The work that makes a sale credible is slow and unglamorous. We reconcile VAT returns against bank statements against payroll records, compute end-of-service gratuity accruals, read the shareholder agreement for pre-emption and drag-along terms, and rebuild the owner's earnings as a buyer would see them. We describe the full approach in how we check a business before we take it to market. The result is a document a buyer's adviser can test line by line.
No adviser can justify that effort on a business that three other firms are also marketing, because the sale may close through any of them and the investment is lost. Under an exclusive mandate the incentive reverses. The adviser who has done the work has every reason to protect the price it supports, to screen out buyers who cannot fund it, and to say no to a mandate that will not hold up.
Pricing discipline
Open listings tend to anchor on the owner's number, because the broker who tells the owner his figure is too high loses the instruction to the one who does not. We see owners overvalue their businesses by a wide margin as a matter of course. The honest answer, built from verified earnings and shown against the market range of 2.0 to 3.5 times SDE for businesses of this size, is often uncomfortable. An adviser working on a competitive open basis has a commercial reason to soften it. An adviser working exclusively has a commercial reason to be right, because a sale at a price that collapses in diligence earns nothing.
That price is usually the one that survives the buyer's lawyers, which matters more than the headline. Our note on why UAE deals stall after signing covers what happens when the numbers were never tested.
What a sound exclusive mandate contains
Exclusivity is only as good as the document that creates it, and owners are right to read it carefully. In our practice a mandate contains the following.
- A fixed term, so the owner can see when the arrangement ends and is not locked in indefinitely.
- A retainer, which pays for the underwriting work and shows that both sides are committed. An adviser who asks for no commitment from the owner is not underwriting anything.
- A success fee payable on completion, with the basis for calculating it stated in plain words, including what counts as consideration when part of the price is deferred.
- A tail period after expiry, covering buyers the adviser introduced during the term. Without it, an owner could wait for the term to end and then close with an introduced buyer without paying. The tail should be defined, limited to named buyers on an introduction log, and not open-ended.
- A fee clause carried into the sale and purchase agreement, so the buyer acknowledges the adviser's introduction and the fee is not dependent on the seller's goodwill at completion.
- Signatures from every shareholder. A mandate signed by one partner of several can be disowned by the others, and a sale that needs all of them to proceed cannot be run on the authority of one.
We also check the company's memorandum of association before any work begins. Pre-emption rights, drag-along and tag-along provisions decide who can sell, to whom and on what terms, and a mandate that ignores them is a mandate that may never be able to complete. Questions of enforceability, and the choice of forum for a dispute, are for the owner's counsel, and we say so in the engagement terms.
The legitimate objections
Owners raise three objections to exclusivity, and each deserves a straight answer.
The first is that one adviser means one network. That is true, and it is why a good exclusive adviser works with other firms where it makes sense. Co-broking with a firm that holds a specific buyer is routine, with the fee shared by agreement and disclosed to the owner. Exclusivity governs who controls the process and the information, not whether other people may be introduced to the opportunity.
The second is the fear of being stuck with an adviser who does nothing. The protection is in the term and in the performance the owner can see. An adviser should report in writing on every buyer approached, every buyer who passed the proof-of-funds gate, and why the others did not. If there is nothing to report, that is the owner's signal, and a short term with a clear review point makes leaving possible without a dispute.
The third is cost. A retainer is a payment made before any result, and it is reasonable for an owner to resist paying it to someone who has not earned his trust. It funds work the owner keeps whether or not the business sells: a verified earnings figure and a reasoned range.
When open marketing is the better choice
An open approach is defensible where the owner already knows each strategic buyer and will approach them himself, or is only testing the market. Even then, choose the adviser and move to exclusivity before any buyer sees confidential material. Information released cannot be taken back.
What to ask before you sign
If you are weighing an exclusive mandate with us or with anyone else, ask four questions. What work will be done before the business is shown to any buyer, and will you receive it in writing? How will buyers be screened, and in what order? What exactly is covered by the tail, and who is on the introduction log? Which shareholders must sign, and has the memorandum been read? The answers show quickly whether the adviser has a process or only a pitch.
For how the mandate fits into a full sale from first conversation to completion, see our process, and for what the underwriting and valuation work involves, see our services. Buyers who want to see how a deal is presented to them can look at the other side of the table at UAE Dealroom.
Written by Joseph Coello, Founder, Coello Advisory. Questions on mandate terms go to WhatsApp.