Sold the business today, feels a bit odd

Sold the business today, feels a bit odd

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PugwasHDJ80

7,522 posts

220 months

Monday 3rd August 2015
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DSLiverpool said:
VEIGHT said:
Yes, congrats DS.

I've got a 'division' of the business that needs more attention / focus than I can give it so want to sell it.

It's automotive consumables to main dealers mostly.

I knew you said that agents are not the best way to start but for someone who hasn't the time to start contacting competitors etc is there an agent you would recommend or steer clear of?
Speak to your accountant first if it's a "connected" one they have a lot of high nett worth clients who are on the look out for projects.
As per my first post spend a lot on adverts before you use an agent as in my experience you will pay many thousands to the agent for dimply advertising it, they will mention a database of clients but after signing this just didn't exist and they asked me to name prospects they should write to.
Cograts DS its a great feeling- i sold my first businesses around 10 years ago and life has had lots of ups and downs since- certainly never regretted it though.

I now work as a corporate finance advisor advising clients how to sell their business. Their s gulf of difference between a broker and an advisor but both should be adding value. I tend to work in £5m- £50m price bracket where having a good advisor is often the difference between no sale, and making a lot of money.

Knowing what i know now, i would never sell any of my own businesses through an accountant again. Good accountants are worth their weight in gold, but they are not skilled at maximising sale returns to shareholders.

gvij

363 posts

123 months

Wednesday 5th August 2015
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What is a starting ballpark for valuing a business? Is it say x times profit, or based on EBITDA vs loan rates from banks? Is there so many years track record? In this case DS sold to someone who knew nothing about the industry market etc does that command a better or worse price? Generally how do they pay, stock at full book , some cash and then performance based?

Thankyou4calling

10,595 posts

172 months

Wednesday 5th August 2015
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gvij said:
What is a starting ballpark for valuing a business? Is it say x times profit, or based on EBITDA vs loan rates from banks? Is there so many years track record? In this case DS sold to someone who knew nothing about the industry market etc does that command a better or worse price? Generally how do they pay, stock at full book , some cash and then performance based?
It can be very hard to value a business, there's no RRP.

Some are a lot easier than others, for instance a property portfolio.

Often you will hear multiples of EBITDA quoted (between 3 and 10) and that can be sound but takes no account of potential.

The hardest thing though can often be finding a buyer regardless of price, many people value their business far higher than prospective purchasers.

I'm in the process of taking over a couple of businesses and have agreed to be paid to do so. It sounds odd on the surface but they are loss making so need turning around.

Although they cost a fair bit to establish the fact they are losing money and are "Potential" has a massive bearing.

Do you have something to sell?

anonymous-user

53 months

Wednesday 5th August 2015
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it really is "how long is a piece of string"


A business is worth different amounts to different people.

In one of my businesses I was able to be very aggressive when acquiring as I had a unique deal with a couple of suppliers which meant for the right business my margin was almost double most of the competition. This meant we were paying top money for some businesses and simply not interested in others.

I used to use a blend of turnover, EBITDA and general "gut feel". However many very small businesses really aren't worth anything to anyone other than the people in them.

I also never used an agent to buy or sell and quite a few deals were nearly ruined by over zealous advisors despite both sides agreeing they wanted to do the deal.


Frimley111R

15,537 posts

233 months

Wednesday 5th August 2015
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desolate said:
I also never used an agent to buy or sell and quite a few deals were nearly ruined by over zealous advisors despite both sides agreeing they wanted to do the deal.
You should see how many are ruined by vendors and acquirers! Selling a business is not easy in most cases.

anonymous-user

53 months

Wednesday 5th August 2015
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Frimley111R said:
You should see how many are ruined by vendors and acquirers! Selling a business is not easy in most cases.
I agree, but it is the vendor's/acquirer's deal to ruin, not their lawyer's or accountants.



Frimley111R

15,537 posts

233 months

Wednesday 5th August 2015
quotequote all
desolate said:
Frimley111R said:
You should see how many are ruined by vendors and acquirers! Selling a business is not easy in most cases.
I agree, but it is the vendor's/acquirer's deal to ruin, not their lawyer's or accountants.
Yes and No, it has been know for accountants to scupper deals so they don't lose a client. For business sale advisors its frustrating as they put in the work to help the company sell and then the client/acquirer does something stupid and it all falls down. Honestly, the stories i could tell you where vendors have cost themselves their entire business or hundreds of thousands of pounds by making very poor decisions at the time of sale...

gvij

363 posts

123 months

Wednesday 5th August 2015
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!
Thankyou4calling said:
gvij said:
What is a starting ballpark for valuing a business? Is it say x times profit, or based on EBITDA vs loan rates from banks? Is there so many years track record? In this case DS sold to someone who knew nothing about the industry market etc does that command a better or worse price? Generally how do they pay, stock at full book , some cash and then performance based?
It can be very hard to value a business, there's no RRP.

Some are a lot easier than others, for instance a property portfolio.

Often you will hear multiples of EBITDA quoted (between 3 and 10) and that can be sound but takes no account of potential.

The hardest thing though can often be finding a buyer regardless of price, many people value their business far higher than prospective purchasers.

I'm in the process of taking over a couple of businesses and have agreed to be paid to do so. It sounds odd on the surface but they are loss making so need turning around.

Although they cost a fair bit to establish the fact they are losing money and are "Potential" has a massive bearing.

Do you have something to sell?
Thanks a comprehensive reply. I suppose its a classic why sell anything unless either you see potential maximised, you see the market as declining with margins declining or perhaps retiring or someone has died. Ive nothing to sell but its nice to know what something is worth putting in the effort to have something at the end.

anonymous-user

53 months

Wednesday 5th August 2015
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gvij said:
Thanks a comprehensive reply. I suppose its a classic why sell anything unless either you see potential maximised, you see the market as declining with margins declining or perhaps retiring or someone has died. Ive nothing to sell but its nice to know what something is worth putting in the effort to have something at the end.
Sometimes a sector is just "hot" and prices are really attractive so you sell, sometimes you are just bored and want to do something else.


foliedouce

3,067 posts

230 months

Thursday 6th August 2015
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PugwasHDJ80 said:
Cograts DS its a great feeling- i sold my first businesses around 10 years ago and life has had lots of ups and downs since- certainly never regretted it though.

I now work as a corporate finance advisor advising clients how to sell their business. Their s gulf of difference between a broker and an advisor but both should be adding value. I tend to work in £5m- £50m price bracket where having a good advisor is often the difference between no sale, and making a lot of money.

Knowing what i know now, i would never sell any of my own businesses through an accountant again. Good accountants are worth their weight in gold, but they are not skilled at maximising sale returns to shareholders.
Thanks DS for sharing and being candid - really interesting and useful.

I sold one (small) business recently at 3 x EBITDA to a company we knew already, very painless, no accountants or advisors, just lawyers needed.

We once tried to buy a business from a broker (BCMS from memory) and it was a bit of a joke, they seemed more like a sales organisation rather than a value add 'advisor' Deal didn't go through.

Currently looking to do some kind of event with another business and echo what pugwash has said. We have appointed a Corporate Finance Advisor with very specific industry experience. We did a beauty parade of PWC, KPMG, BDO and a few others and chose the organisation in question due to the value we felt they could bring to the process and positioning our business as a strategic investment (ie increase the multiple / find synergies to improve value).

They are currently working closely with us to help with our Market Proposition and IP which in itself will bring value further downstream. So far, I am very impressed, but then we haven't gone to market yet. I will work with them to develop the target list, and they will proactively contact the list (as well as their own database) but they don't advertise as such in the way that has been described on here.

Horses for courses I guess, they're all different, but I wold urge people not to judge one advisor based on experience of another - there is a broad spectrum out there offering different services, and I suspect very different fee structures. Our guys only make the big bucks when the deal is done.

DSLiverpool

Original Poster:

14,672 posts

201 months

Thursday 6th August 2015
quotequote all
Frimley111R said:
desolate said:
Frimley111R said:
You should see how many are ruined by vendors and acquirers! Selling a business is not easy in most cases.
I agree, but it is the vendor's/acquirer's deal to ruin, not their lawyer's or accountants.
Yes and No, it has been know for accountants to scupper deals so they don't lose a client. For business sale advisors its frustrating as they put in the work to help the company sell and then the client/acquirer does something stupid and it all falls down. Honestly, the stories i could tell you where vendors have cost themselves their entire business or hundreds of thousands of pounds by making very poor decisions at the time of sale...
I agree with this and will add that my particular agent was spectacularly useless at everything except advertising - not all agents are the same.

DSLiverpool

Original Poster:

14,672 posts

201 months

Thursday 6th August 2015
quotequote all
Value of the business - its a varied thing when one mans £1k is another mans tenner. In my case I like to think synergy and supply chain deals played a big part but the fact I am doing nearly 4 months (possibly longer) and a wider remit than just integrating my business makes me think I sold myself as well ;0)

I know I am good at that (long tale short) I was at Novar (now Honeywell) as a plastic director (national account director) when a headhunter called the office asking for the sales director, they put them through to me, I blagged it and ended up as the sales director (UK) for Invensys controls (now Siemens) on HVAC. What I know about HVAC you can write on a thermostatic radiator valve! but it was a great 2 years on eye watering money I left to work for pocket money at DST.

Today on the trip in to Manchester I have had the best business idea I have ever had, I am so up for it I wont sleep tonight until I scribble it down in some sort of plan.

Digga

40,207 posts

282 months

Friday 7th August 2015
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DSLiverpool said:
Today on the trip in to Manchester I have had the best business idea I have ever had, I am so up for it I wont sleep tonight until I scribble it down in some sort of plan.
This is what I love.

Whether it's a business idea, or an engineering innovation or solution, it exciting when these flashes hit and they are very seldom when you are 'trying' to figure them out, but normally busy doing something and not thinking.

I'm also a great believer in the brief, stand-up meeting; we had a cracking one yesterday and it threw out a really neat plan.

DSLiverpool

Original Poster:

14,672 posts

201 months

Saturday 15th August 2015
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To add - no matter what you think at the time or the reward on offer having a handover in excess of a month is not a good idea.