selling half of the business
Discussion
Hello,
i have built in the last 12 months an IT-comms company/white label tech services company , i have turned over nearly 500k so far, year end is july.
now a large company wanted to buy me out, i dont want to sell it all, so have a meeting tomorrow with a view to sell a 50% stake, never done this type of thing before!
i have an accountant whom i have not yet spoke to about this, will do that this week.
i have a full time job elsewhere in the Defence industry but is flexible eg i work from home 90% of the time, ive put the hard work into the last 12 months to get it where it is and its basically to much for me to handle now, admin wise, timesheet reconciling, and general time to push other services into existing clients i have no time for due to sorting out projects, materials etc!
now my proposition to this company is that i sell them 50%, i stop giving away circa 20%/30% margin weekly to a payroll/factoring company ( my weekly wage bill for contractors ranges from 5k-30k) they are cash rich enough to payroll my business easily, i help expand our services into there telephone biased market, i am happy to rebrand etc to be brought into their group, i havent been taking a wage, only divs when i wanted cash! i can offer them alot and this is now the third meeting i am having with them with a view to sort a deal, i dont know if they will offer me a wage or a profit share what can i expect?
what paperwork do i need to produce to sell the shares? can my accountant do this? i am 29 and my first baby is due in the next month, i dont own a house yet! but basically this cash circa 100-200k will help secure the house we want! any help that ca be given would be a great help in terms of what not to do, what too do etc!
sorry for the long post!
i have built in the last 12 months an IT-comms company/white label tech services company , i have turned over nearly 500k so far, year end is july.
now a large company wanted to buy me out, i dont want to sell it all, so have a meeting tomorrow with a view to sell a 50% stake, never done this type of thing before!
i have an accountant whom i have not yet spoke to about this, will do that this week.
i have a full time job elsewhere in the Defence industry but is flexible eg i work from home 90% of the time, ive put the hard work into the last 12 months to get it where it is and its basically to much for me to handle now, admin wise, timesheet reconciling, and general time to push other services into existing clients i have no time for due to sorting out projects, materials etc!
now my proposition to this company is that i sell them 50%, i stop giving away circa 20%/30% margin weekly to a payroll/factoring company ( my weekly wage bill for contractors ranges from 5k-30k) they are cash rich enough to payroll my business easily, i help expand our services into there telephone biased market, i am happy to rebrand etc to be brought into their group, i havent been taking a wage, only divs when i wanted cash! i can offer them alot and this is now the third meeting i am having with them with a view to sort a deal, i dont know if they will offer me a wage or a profit share what can i expect?
what paperwork do i need to produce to sell the shares? can my accountant do this? i am 29 and my first baby is due in the next month, i dont own a house yet! but basically this cash circa 100-200k will help secure the house we want! any help that ca be given would be a great help in terms of what not to do, what too do etc!
sorry for the long post!
If you have built that in 9 months - consider selling them the whole business...
and then starting again:
- are your skills at starting businesses or growing them - you mention that you don't have time to do some of the growth tasks, so perhaps the starting bit is best suited?
- if you sell a part of the business they will have a lot of expectations of what you need to do for your half to continue to support the overall growth - and this is likely to be around time committment - if you are young / have another job / a child coming - this may cause you issues
- 50% each - who is in charge?
I think you might be entering a whole world of complexity by going into partnership with them...
and then starting again:
- are your skills at starting businesses or growing them - you mention that you don't have time to do some of the growth tasks, so perhaps the starting bit is best suited?
- if you sell a part of the business they will have a lot of expectations of what you need to do for your half to continue to support the overall growth - and this is likely to be around time committment - if you are young / have another job / a child coming - this may cause you issues
- 50% each - who is in charge?
I think you might be entering a whole world of complexity by going into partnership with them...
I can see the benefits of joining them, and they can see the benefits of having my business and expertise in this field.
I don't want to let go, I can carry on now as I am happily but lack the ability to do BD etc , the ther company have an active customer base of of over 600 where my services and expertise would be an easy sell into them, they are currently one of my clients eg we are doing work for them on their customer sites eg VoIP rollouts , structured cabling etc.
I'll see what's on the table and update you all tommorow! Then I'll have to get there involved to help etc!
I don't want to let go, I can carry on now as I am happily but lack the ability to do BD etc , the ther company have an active customer base of of over 600 where my services and expertise would be an easy sell into them, they are currently one of my clients eg we are doing work for them on their customer sites eg VoIP rollouts , structured cabling etc.
I'll see what's on the table and update you all tommorow! Then I'll have to get there involved to help etc!
Hewbie said:
Hello,
i have built in the last 12 months an IT-comms company/white label tech services company , i have turned over nearly 500k so far, year end is july.
now a large company wanted to buy me out, i dont want to sell it all, so have a meeting tomorrow with a view to sell a 50% stake, never done this type of thing before!
i have an accountant whom i have not yet spoke to about this, will do that this week.
i have a full time job elsewhere in the Defence industry but is flexible eg i work from home 90% of the time, ive put the hard work into the last 12 months to get it where it is and its basically to much for me to handle now, admin wise, timesheet reconciling, and general time to push other services into existing clients i have no time for due to sorting out projects, materials etc!
now my proposition to this company is that i sell them 50%, i stop giving away circa 20%/30% margin weekly to a payroll/factoring company ( my weekly wage bill for contractors ranges from 5k-30k) they are cash rich enough to payroll my business easily, i help expand our services into there telephone biased market, i am happy to rebrand etc to be brought into their group, i havent been taking a wage, only divs when i wanted cash! i can offer them alot and this is now the third meeting i am having with them with a view to sort a deal, i dont know if they will offer me a wage or a profit share what can i expect?
what paperwork do i need to produce to sell the shares? can my accountant do this? i am 29 and my first baby is due in the next month, i dont own a house yet! but basically this cash circa 100-200k will help secure the house we want! any help that ca be given would be a great help in terms of what not to do, what too do etc!
sorry for the long post!
Selling a 50% stake is not a great idea to be honest. It gives them most of the benefits of ownership at half the cost. In addition, it would more difficult to fully exit.i have built in the last 12 months an IT-comms company/white label tech services company , i have turned over nearly 500k so far, year end is july.
now a large company wanted to buy me out, i dont want to sell it all, so have a meeting tomorrow with a view to sell a 50% stake, never done this type of thing before!
i have an accountant whom i have not yet spoke to about this, will do that this week.
i have a full time job elsewhere in the Defence industry but is flexible eg i work from home 90% of the time, ive put the hard work into the last 12 months to get it where it is and its basically to much for me to handle now, admin wise, timesheet reconciling, and general time to push other services into existing clients i have no time for due to sorting out projects, materials etc!
now my proposition to this company is that i sell them 50%, i stop giving away circa 20%/30% margin weekly to a payroll/factoring company ( my weekly wage bill for contractors ranges from 5k-30k) they are cash rich enough to payroll my business easily, i help expand our services into there telephone biased market, i am happy to rebrand etc to be brought into their group, i havent been taking a wage, only divs when i wanted cash! i can offer them alot and this is now the third meeting i am having with them with a view to sort a deal, i dont know if they will offer me a wage or a profit share what can i expect?
what paperwork do i need to produce to sell the shares? can my accountant do this? i am 29 and my first baby is due in the next month, i dont own a house yet! but basically this cash circa 100-200k will help secure the house we want! any help that ca be given would be a great help in terms of what not to do, what too do etc!
sorry for the long post!
It's likely that your business could be worth around £750k using a 'traditional' P/E metric, however US acquirers are paying up to 6 times revenues for 'hot' businesses.
I run a number of businesses and would be happy to chat to you if it would help. I have also bought and sold businesses too. PM me if you want a quick natter.
OP - I agree with NDA, personally I'd be selling 100% with cash up front and possibility of an earn out for future performance. It all depends on how integral you are to the business.
As a quick aside, I can't believe that you're paying 20-30% to bankroll a contractor - are you sure you're not getting confused with agency margin?
If not, it would very easy to reduce that cost by changing your banking facilities and make yourself more profit.
The market does appear to be quite hot right now, so I'd be tempted to act quickly, who knows how long it will last if we get a Labour / SNP government?
As a quick aside, I can't believe that you're paying 20-30% to bankroll a contractor - are you sure you're not getting confused with agency margin?
If not, it would very easy to reduce that cost by changing your banking facilities and make yourself more profit.
The market does appear to be quite hot right now, so I'd be tempted to act quickly, who knows how long it will last if we get a Labour / SNP government?
hi,its a strange arrangement! ill try to explain it!
a company help set me up eg they paid to get my website sorted, and helped me sign up with the funding house, simplicity, now my turnover via simplicity is nearly 500k to date, my margin figure is over 150k, i only get paid the margin, minus the first companies cut which is usually between 20/30%, i cna walk away from them at any time which is what im going to do but they were intregral on getting me setup, helping me with company formation, bank accounts etc but now the money i pay them is unjust as they dont do bugger all!
i get a weekly margin payout from pay and charge i submit for the jobs we have on a weekly basis either as a price job or a labour only contractor.
for instance this week my charge is 17k my pay is 13k so 4k margin minus 20/30% will be my weekly payout from simplicity
i am the business and will struggle to let go but i need the freedom to know that my timesheets/admin and funding can be done i am not cash rich enough to pay my weekly wage bill.
my bank turnover figure does not show my 500k turnover as i obviously only get the margin on a weekly basis not the full invoice amount that simplicity are invoicing for me, this makes it difficult for people to understand, i have proof of my turnover via simplicity and the margin and debtors book etc.
a company help set me up eg they paid to get my website sorted, and helped me sign up with the funding house, simplicity, now my turnover via simplicity is nearly 500k to date, my margin figure is over 150k, i only get paid the margin, minus the first companies cut which is usually between 20/30%, i cna walk away from them at any time which is what im going to do but they were intregral on getting me setup, helping me with company formation, bank accounts etc but now the money i pay them is unjust as they dont do bugger all!
i get a weekly margin payout from pay and charge i submit for the jobs we have on a weekly basis either as a price job or a labour only contractor.
for instance this week my charge is 17k my pay is 13k so 4k margin minus 20/30% will be my weekly payout from simplicity
i am the business and will struggle to let go but i need the freedom to know that my timesheets/admin and funding can be done i am not cash rich enough to pay my weekly wage bill.
my bank turnover figure does not show my 500k turnover as i obviously only get the margin on a weekly basis not the full invoice amount that simplicity are invoicing for me, this makes it difficult for people to understand, i have proof of my turnover via simplicity and the margin and debtors book etc.
Ok that makes sense, if that's the only value they brought, I'd be migrating away ASAP
If you are integral then here's no way they will let you leave after buying it, so you'll be tied in. Unless they are buying it purely for a framework or similar. I note that you are in the Defence sector, do you need a framework to supply to your clients?
If you are integral then here's no way they will let you leave after buying it, so you'll be tied in. Unless they are buying it purely for a framework or similar. I note that you are in the Defence sector, do you need a framework to supply to your clients?
i am personally in the defence sector , my business is not, we do some work but mainly outside of it! no framework needed.
ok meeting with them over, they are keen to progress but want to know what i want, the hygeine factors,
my main issue is that i dont want to do everything from admin to bd to being a director etc i want the admin taken over, timesheet reconcilliaton, dealing with invoices etc.
ok meeting with them over, they are keen to progress but want to know what i want, the hygeine factors,
my main issue is that i dont want to do everything from admin to bd to being a director etc i want the admin taken over, timesheet reconcilliaton, dealing with invoices etc.
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