Selling a business can be a major milestone for any entrepreneur. But as the recent High Court decision in Inspired Education Online Limited v Tom Crombie [2025] EWHC 1236 (Ch) shows, the warranties you give – and the emails you send – can come back to haunt you.
Here’s what happened and what it means for small business owners and those looking to sell.
1. What is a warranty?
When you sell a business, you typically give the buyer a set of promises, known as warranties, about the state of the business. These cover everything from compliance with the law to the absence of legal disputes. If these turn out to be false, the buyer can bring a claim against you for breach of warranty, often seeking damages for the difference between the price paid and the true value of the business.
2. What are completion accounts?
A share sale agreement often includes a mechanism called ‘completion accounts’ to finalise the purchase price. These are financial statements prepared after completion that can adjust the price based on the actual financial position of the business at the time of completion. This can work in the seller’s or the buyer’s favour, depending on the figures.
3. The background
Tom Crombie founded My Online Schooling Ltd (MOS), an online school which grew rapidly during the Covid-19 pandemic. In November 2022, he sold 100% of the shares to Inspired Education Online Limited (Inspired), part of a larger international group.
The sale price was around £9 million, subject to adjustments under a detailed share purchase agreement (SPA). Crombie gave warranties about the business, including that there was no misconduct that could have led to his dismissal, and that he was not aware of any facts that might give rise to litigation.
Later, Inspired discovered several email chains between Crombie and his COO, containing what they described as “highly offensive” content. Inspired argued these emails were so serious that they amounted to gross misconduct, breaching the warranties Crombie gave at the time of sale.
4. The allegations
Inspired’s claim was that:
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The emails were not disclosed to them before the sale.
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If Inspired had known about the emails, it would never have gone ahead with the purchase.
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Crombie had also breached a non-compete clause in the SPA by supporting a departing employee who was setting up a rival business.
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Completion accounts and deferred consideration calculations were challenged, with Inspired arguing they had the right to finalise these accounts unilaterally.
Crombie denied all allegations and counterclaimed that the completion accounts and deferred consideration had not been properly agreed.
5. What the judge decided
Mrs Justice Joanna Smith rejected most of Inspired’s claims:
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Emails: While Crombie admitted the emails were unprofessional and in breach of company policy, the judge accepted they were private banter between friends and not intended for general consumption. She ruled they did not amount to gross misconduct.
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Non-compete breach: The court found no clear evidence that Crombie had supported the departing employee’s rival venture. While the employee had downloaded confidential files, Crombie himself had reported this to Inspired as soon as he became aware.
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Completion accounts: The judge ruled that the mechanism in the SPA for agreeing the completion accounts had not been properly completed, so they could not be deemed agreed. This meant Inspired could not unilaterally finalise the figures.
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Deferred consideration: Inspired had tried to reduce the amount payable to Crombie under the SPA by serving a ‘TC Event of Default’ notice (a clause in the SPA allowing a discount if Crombie defaulted). The judge held that the circumstances for such a default had not been met.
6. Advice for business sellers
So, what lessons can you take from this case?
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Think before you type: Emails can and do resurface during due diligence or litigation. Even “banter” with colleagues could be misinterpreted. Keep it professional on work accounts.
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Be open about potential issues: If you are aware of any conduct or disputes that might affect the buyer’s view of the business, disclose them clearly during the sale process. Failure to do so could lead to costly warranty claims.
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Understand your warranties: When you sign a share sale agreement, you are making binding promises about the business. Read them carefully and understand their scope – get legal advice if you’re unsure.
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Completion accounts matter: Don’t assume that completion accounts are a formality. They can significantly affect the final price you receive. Make sure you understand the process and your rights under the SPA.
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Get legal advice early: Selling a business is complicated. A solicitor experienced in business sales can help you navigate warranties, completion accounts, deferred consideration, and any post-completion issues that might arise.
Need advice on selling your business?
I’m Steven Mather, Solicitor, and I specialise in helping business owners get the best outcome when selling. If you’re thinking of selling your business – or are in a dispute like this one – get in touch for a no-obligation chat.