Selling a business - who to talk to?
Discussion
tlrracer said:
I have had more calls from RTA asking if i would like to sell my business since i cancelled my contract (very expensive mistake ever going with them) than i ever had whilst they were trying to sell my business. Todays unfortunate was told politely to never call again and shove it up his a**e.
Yep, probably the most widely complained about in the media. See link here (although this was 2009)http://whatconsumer.co.uk/forum/consumer-news/4205...
Frimley111R said:
There are a number of keys to getting the best price/terms but the main one is generating competing, strategically motivated acquirers. Accountants are not equipped for this (and why would they be?) and on occassions will try to scupper sales because it means losing a client.
This bit, especailly about the accountants is pretty sound advice.As for that Nigerian offer, £7.20 was it? PM me quick.
Frimley111R said:
Sorry, but apart from the 'most brokers are not very good' the rest of this is very poor advice. If your accountant/solicitor is not advising you on how to sell your products/services why on earth would you use them to advise you on selling your most valuable asset? There are a number of keys to getting the best price/terms but the main one is generating competing, strategically motivated acquirers. Accountants are not equipped for this (and why would they be?) and on occassions will try to scupper sales because it means losing a client.
There are firms of accountants that have dedicated departments carrying out this work and are very well equipped. The potential vendor needs to see a number of people and speak to people that have sold to get thier take.P.s Any decent accountant will do what is best for the client, even if that means losing them on a sale. If you scupper the deal you are likely to lose them anyway. If you are working on a contingency basis it does not follow that you would want to throw the deal, since you won't earn a fee for an abortive transaction.
Edited by wattsm666 on Friday 31st August 10:01
Frimley111R said:
Sorry, but apart from the 'most brokers are not very good' the rest of this is very poor advice. If your accountant/solicitor is not advising you on how to sell your products/services why on earth would you use them to advise you on selling your most valuable asset? There are a number of keys to getting the best price/terms but the main one is generating competing, strategically motivated acquirers. Accountants are not equipped for this (and why would they be?) and on occassions will try to scupper sales because it means losing a client.
Not sure I understand - why must your accountant/solicitor be advising on how to sell goods or services to enable them to sell a business? Surely they are no different to a broker in that respect? I know many accountancy firms who have been very good, and proactive, in generating 'competing, strategically motivated acquirers' - and have worked with them to maximise revenue for a selling client.I'm not saying that all accountants/solicitors are capable of this - I suspect many aren't - and that is why its good to go on recommendation, and find advisors who are commercially minded and really do understand your business. Just as I have criticisms of brokers, I'm sure there are just as many criticisms of lawyers - which is why we all strive to give a better service to clients so as to distinguish ourselves from our under-performing peers.
My advice was just my thoughts based on over 10 years of buying and selling businesses for clients, in which time I can only think of one or two occasions where I've felt that a broker 'earnt' their fee - but in each of those two cases, I will be the first to agree that the brokers concerned were excellent, sped up the process, and made the deal a darn sight easier for everyone involved. If all brokers behaved like them, then I would not hesitate in recommending using a broker - unfortunately my experience tells me that this is not the case.
wattsm666 said:
There are firms of accountants that have dedicated departments carrying out this work and are very well equipped. The potential vendor needs to see a number of people and speak to people that have sold to get thier take.
P.s Any decent accountant will do what is best for the client, even if that means losing them on a sale. If you scupper the deal you are likely to lose them anyway. If you are working on a contingency basis it does not follow that you would want to throw the deal, since you won't earn a fee for an abortive transaction.
There a big difference between specialist organisations and accountants who have a couple of people trying to sell businesses. No doubt some are successful but in 6 yrs I've not seen any (excepting, perhaps, the very largest accountancy companies who deal with major transactions) display any significant levels of success. P.s Any decent accountant will do what is best for the client, even if that means losing them on a sale. If you scupper the deal you are likely to lose them anyway. If you are working on a contingency basis it does not follow that you would want to throw the deal, since you won't earn a fee for an abortive transaction.
Edited by wattsm666 on Friday 31st August 10:01
I agree that owners and shareholders should look at more than one company to assist them though.
You are right about 'decent' accountants on all points but the reality is that some see a client not selling as a way to keep that client.
seaninog said:
With apologies to Frimey111R I regret to say i had a negative experience with BCMS a couple of years ago.
I was in the market to buy a business, registered with them, spoke to some lady who took my details and seemed very optimistic they would be able to help (even though I was looking to buy something at the smaller end of their offering sub £1m) and she assured me they'd be in touch.
Weeks went by and I heard nothing so I called again and was once again reassured by the same lady that they would be in touch.
More weeks and still nothing so I called again - same story.
Months later, still nothing so I called them to pull the plug and they had no record of me ever having registered...?!
In summary, I was left with the impression that they are a fairly big organisation where they focus on deal throughput (their marketing is extensive) but the follow through service doesn't match this and they can get overwhelmed. Ironically about 6 months ago they got in touch with via a cold call to my business to offer their services to sell my current business and I had to politely decline as I said if they can't manage their potential buyers effectively, it doesn't give me confidence as a seller.
Again, apologies to Frimley111R who works with them but since he asked I felt I had to tell the OP my story. Hopefully I am a one-off and they are normally very good but all i can say is that's what happened to me with them.
Hi Sean, I was in the market to buy a business, registered with them, spoke to some lady who took my details and seemed very optimistic they would be able to help (even though I was looking to buy something at the smaller end of their offering sub £1m) and she assured me they'd be in touch.
Weeks went by and I heard nothing so I called again and was once again reassured by the same lady that they would be in touch.
More weeks and still nothing so I called again - same story.
Months later, still nothing so I called them to pull the plug and they had no record of me ever having registered...?!
In summary, I was left with the impression that they are a fairly big organisation where they focus on deal throughput (their marketing is extensive) but the follow through service doesn't match this and they can get overwhelmed. Ironically about 6 months ago they got in touch with via a cold call to my business to offer their services to sell my current business and I had to politely decline as I said if they can't manage their potential buyers effectively, it doesn't give me confidence as a seller.
Again, apologies to Frimley111R who works with them but since he asked I felt I had to tell the OP my story. Hopefully I am a one-off and they are normally very good but all i can say is that's what happened to me with them.
To be fair, BCMS don't concentrate on buy side, but sell side.
I've had excellent experiences with them.
Pugwash
HoHoHo said:
Good friend of mine is thinking of selling his business and has asked for advice, which having never sold a business I'm lacking! His company is well established (over 10 years), about £700k T/O with net profit of £100k. Good loyal client base and a good order book. As far as I can see he has cash in the bank and everything is ticking along nicely. He has a genuine reason to sell but I don't want to mention it on here though (equally nothing to worry about!)
He mentioned KBS Corporate which I've never heard of. They seem to be OK looking at their site, but web sites can be deceptive! Their fees are £5k up front and 4% of the final sale value. They've valued it currently at anywhere between £350k - £500k + cash in bank at a given date with stock to be negotiated based on a two year exit strategy.
Anyone had any experience of this type of transaction or any companies that might help?
Hoho, He mentioned KBS Corporate which I've never heard of. They seem to be OK looking at their site, but web sites can be deceptive! Their fees are £5k up front and 4% of the final sale value. They've valued it currently at anywhere between £350k - £500k + cash in bank at a given date with stock to be negotiated based on a two year exit strategy.
Anyone had any experience of this type of transaction or any companies that might help?
Sold my first company about 7 years ago, through my very well respected (and excellent) accountants. i don't feel they achieved particularly good value in retrospect. in an ideal world i would have used a specific sales agent who knew what they were doing- in the industry in which i was in, those agents were teminally useless, but a non-industry specific agent would have been a much better option.
From my point of view it's likely to have cost me a good 6 figure sum by using my accountants.
HTH
Pugwash
superlightr said:
What sort of mulitplier would you consider for a very establised letting agents (specialist letting agents) - residential landlords all on contracts to pay commission for length tenant stays in property most tenancies fixed 6-12 mths and then renewed. Plus extra streams of income from admin fees etc.
Quite a unusal type of office as the 'stock' is very stable and long term and one of the 'up' types of business in good and bad times.
Is it independent or a franchised brand? What are the terms of the property lease (length of tenure, I'm assuming it's run out of rented offices)? What is the location like, high street, off pitch, business park? How long established? Where is it located? - it has a bearing on grounds of catchment area and type of portfolio being managed.Quite a unusal type of office as the 'stock' is very stable and long term and one of the 'up' types of business in good and bad times.
Edited by superlightr on Thursday 30th August 12:52
PugwasHDJ80 said:
To be fair, BCMS don't concentrate on buy side, but sell side.
This seems like an odd statement to me. How can you concentrate on Sell side without managing the Buy side? It would be like an Estate Agent telling you how to clean your house, tidy your garden and paint the walls in preparation for a sale but then saying they're not responsible for bringing anyone around for viewings!?There is no Sell side without Buy side. The two go hand in hand.
tlrracer said:
I wont tell you who to use but PM me and i will tell you who NOT to use!!
I got stitched up by this bunch of sharks last year and am £700 worse off for sweet FA from their point!
I caught a bit of "rip off britain" on TV while I was having a cup of tea the other day.I got stitched up by this bunch of sharks last year and am £700 worse off for sweet FA from their point!
Cost a lady trying to sell her hair salon business £3,600 for nothing.
make sure you read all of the contract before you sign anything!
I keep getting the same people phoning, tell me how crap the last people were who were selling my business, and how they were much better etc and could sell in 6 months, so i stoppped the guy in his tracks with my Terms, sell within 6 months, no fee upfront and a fixed end payment, suddenly it changed to "well we will have to come and see you, because it may not be a business we want to sell", they were told if the could not meet that criteria not to call back. Monday of last week, i was called yet again, I asked their business name, so i could google it, and then told them that maybe to call back in a months time, the very next day i get a call from the same bloke who i gave my selling criteria to previously (could recognise that voice a mile away)who was told that im not interested and was eventually hung up on, who then proceeded to call 3 times until was told GO AWAY!
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This is an old thread, but I can add some value so I'm going to reply.
There seems to be a lot of misunderstanding about selling a business. Firms that sell businesses are not just "transfer agents" and "business brokers" but a whole range of corporate finance firms, M&A advisory firms and all kinds of others.
Micro businesses tend to end up with low end "transfer agents" and "brokers" who charge no fees (or low fees) but are fairly useless. Their success rate at selling businesses is often less than 5%!
But if you have a larger business and are using a decent firm (not one of those plonkers who keep cold calling you), you are far more likely to sell. Many corporate finance firms have success rates of over 80%. That's partly because they are good at what they do and partly because they are very selective in what they take on! They will take on only those businesses that have a good chance of selling (and, unfortunately, that excludes most one man or two man bands or any business where the owner is working in it full time, businesses with less than a few million in turnover, businesses with known risks like high customer concentration, loss making businesses, all sorts).
However, you will pay a stiff advance fee if you want one of the good firms to take you on. A competent professional needs to spend a couple of hundred hours on studying your accounts and business, preparing a 50 page IM, attracting the buyers, engaging with them and answering each one's numerous questions ...and taking them to the point of making an offer. And that's just to get to the half way point (before DD). They will not and I repeat WILL NOT do that without a retainer. The average retainer for a competent corporate finance firm is.... are you sitting down? Grab yourself a seat. The average retainer is in excess of £30K!
So, yes, it doesn't make sense for a small cafe or hair salon. You need to be turning over a few million to be able to justify that kind of advance fee.
Why on earth would anyone who's highly competent at a very skilled job take on the risk of spending 200 hours without any commitment from you? You could pull out of the sale at any time and he would lose 200 hours worth of his work (and that's £20K - £40K!)
It doesn't happen!
Selling a business is a big deal, a very important decision for most people. I simply can't understand why people don't take the broker decision more seriously. Perhaps they sign up with the dodgy brokers at the bottom end of the market because these brokers are so good at flattering them and telling them how fantastic their business is and what a huge sum of money they'll get if they sell it!
There seems to be a lot of misunderstanding about selling a business. Firms that sell businesses are not just "transfer agents" and "business brokers" but a whole range of corporate finance firms, M&A advisory firms and all kinds of others.
Micro businesses tend to end up with low end "transfer agents" and "brokers" who charge no fees (or low fees) but are fairly useless. Their success rate at selling businesses is often less than 5%!
But if you have a larger business and are using a decent firm (not one of those plonkers who keep cold calling you), you are far more likely to sell. Many corporate finance firms have success rates of over 80%. That's partly because they are good at what they do and partly because they are very selective in what they take on! They will take on only those businesses that have a good chance of selling (and, unfortunately, that excludes most one man or two man bands or any business where the owner is working in it full time, businesses with less than a few million in turnover, businesses with known risks like high customer concentration, loss making businesses, all sorts).
However, you will pay a stiff advance fee if you want one of the good firms to take you on. A competent professional needs to spend a couple of hundred hours on studying your accounts and business, preparing a 50 page IM, attracting the buyers, engaging with them and answering each one's numerous questions ...and taking them to the point of making an offer. And that's just to get to the half way point (before DD). They will not and I repeat WILL NOT do that without a retainer. The average retainer for a competent corporate finance firm is.... are you sitting down? Grab yourself a seat. The average retainer is in excess of £30K!
So, yes, it doesn't make sense for a small cafe or hair salon. You need to be turning over a few million to be able to justify that kind of advance fee.
Frimley111R said:
There a big difference between specialist organisations and accountants who have a couple of people trying to sell businesses. No doubt some are successful but in 6 yrs I've not seen any (excepting, perhaps, the very largest accountancy companies who deal with major transactions) display any significant levels of success.
There are hundreds of UK firms that have a very high success rate. I could name 100 just off the top of my head without looking at any notes. The problem is that most vendors only come across the useless bottom feeders - the dozen or so cold calling, hard sell, market trader type chancers.Frimley111R said:
I agree that owners and shareholders should look at more than one company to assist them though.
Not in the UK, they shouldn't. The US has a bit of a co-brokering culture, the UK doesn't. Brokers, or to be more precise "intermediaries", will generally not agree anything other than sole agency. There are reasons for this but I won't go into them here.HIS LM said:
My advice do not pay any broker any fees up front to sell your business if they ask for fees upfront walk away.
Only the crap brokers at the bottom end of the market will work on those terms! Why on earth would anyone who's highly competent at a very skilled job take on the risk of spending 200 hours without any commitment from you? You could pull out of the sale at any time and he would lose 200 hours worth of his work (and that's £20K - £40K!)
It doesn't happen!
tlrracer said:
I keep getting the same people phoning, tell me how crap the last people were who were selling my business, and how they were much better etc and could sell in 6 month...
Business owners need to stop talking to people like that. Never appoint a broker who found you, appoint a broker whom you found yourself after days (or weeks) of research into brokers (before compiling a shortlist of candidates each of whom you then investigated in more detail). Selling a business is a big deal, a very important decision for most people. I simply can't understand why people don't take the broker decision more seriously. Perhaps they sign up with the dodgy brokers at the bottom end of the market because these brokers are so good at flattering them and telling them how fantastic their business is and what a huge sum of money they'll get if they sell it!
DSLiverpool said:
Accountants have a network of entrepreneurial clients who they suggest businesses to.
That is, I'm afraid, not how to sell a business! If the business is of any decent size, there's a ton of work to do if you want to sell it properly - see my previous post. You don't just introduce them to buyers! (And, no, most accountants don't have "a network of entrepreneurial clients" to whom they suggest businesses.)
If the business is a micro business - perhaps a one man band - 'entrepreneurs' don't want to buy it! It's basically a job, not a business. Entrepreneurs don't want to buy jobs. Furthermore, there's likely to be some level of skill required to perform this "job" whether it's a plumbing "business", a post office or a hair salon. Your accountant is not the best person to find you the right parties.
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