Selling a business
Discussion
How does one go about it? Are there any trustworthy honest agents out there or do they all apply the same scheme - give inflated valuation, tell you what you want to hear, get you to signup and pay, keep you hanging, tell you you want too much, ask for more marketing money...
Private sale? How?
Private sale? How?
Have been the acquired and acquiree over the years.
The route to interested parties came about through normal networking and a pro-active accountant. We did start going down the agency route on one but spotted quite early that they weren't really needed.
The only thing I'd say is that the seller will always feel they've been screwed on price. As will the buyer.
The route to interested parties came about through normal networking and a pro-active accountant. We did start going down the agency route on one but spotted quite early that they weren't really needed.
The only thing I'd say is that the seller will always feel they've been screwed on price. As will the buyer.
Drawweight said:
I’d say it depends on the business and also turnover / profit.
Too many times business owners have an inflated opinion on the worth of the business.
Big business would be of interest to an agent. A small business you’d struggle to find anyone to represent you.
I think it is important to stress the point in bold, and be realistic. Too many times business owners have an inflated opinion on the worth of the business.
Big business would be of interest to an agent. A small business you’d struggle to find anyone to represent you.
In my experience, most small businesses are worth little more than the value of their assets/stock/vehicles, and a few quid for the goodwill and business name.
I have watched people try to sell good, long-standing, profitable, reputable businesses for years and years without because they are trying to ask a price too far above the asset value, and no one wants to pay it. These people often mistakenly think that just because they have built and run a business over 30 years that it must be worth a fortune, and some even have the idea in their heads that the the sum they sell for will be their pension pot.
As Drawweight says, bigger business, a brand, or a company that has a massive repeat customer book is often worth a lot more than just the assets as the name and customer book is valuable.
What is the business we are talking about here?
Also agree with this:
StevieBee said:
Have been the acquired and acquiree over the years.
The route to interested parties came about through normal networking and a pro-active accountant. We did start going down the agency route on one but spotted quite early that they weren't really needed.
The only thing I'd say is that the seller will always feel they've been screwed on price. As will the buyer.
When I have seen businesses bought and sold, it has usually been to sold to an employee who wanted to take it over, or someone else locally who simply made contact in person or via accountants or other business etc.The route to interested parties came about through normal networking and a pro-active accountant. We did start going down the agency route on one but spotted quite early that they weren't really needed.
The only thing I'd say is that the seller will always feel they've been screwed on price. As will the buyer.
Thanks all - we are talking about a small sign-making business with most of its sales coming from the same clients who use us almost as their department for years - topped with local clientele and some trade sales under another brand. All kit is own outright and the team is complete and can run without the owner. Some unique offerings, registered trademarks, various domains, and scope for growth all there. No sales activities at all it all comes to us. The asking price is just over the yearly turnover. Reason - move abroad. I think all in all a good opportunity for someone at a reasonable price - but then again it's me who will pocket the money so I would think that 
sickrabbit said:
Thanks all - we are talking about a small sign-making business with most of its sales coming from the same clients who use us almost as their department for years - topped with local clientele and some trade sales under another brand. All kit is own outright and the team is complete and can run without the owner. Some unique offerings, registered trademarks, various domains, and scope for growth all there. No sales activities at all it all comes to us. The asking price is just over the yearly turnover. Reason - move abroad. I think all in all a good opportunity for someone at a reasonable price - but then again it's me who will pocket the money so I would think that
Nobody's really interested in the turnover, so expect 2 to 3 x net profits plus value on the balance sheet. Good luck with the move abroad 
This is really timely, we looked at a Sub-supplier yesterday who is hoping to retire. On their accounts and ledger, they have nearly 800k of machinery.
After 3 hours this morning with 2 reputable Auctioneers who specialise in this, we are at 65k before costs if it was to be sold. Specialist equipment is only valuable to the user.
We would keep using it but the point is the seller is going to be very disappointed since whatever way you look at these things people have a figure in their heads and it's not 8%
After 3 hours this morning with 2 reputable Auctioneers who specialise in this, we are at 65k before costs if it was to be sold. Specialist equipment is only valuable to the user.
We would keep using it but the point is the seller is going to be very disappointed since whatever way you look at these things people have a figure in their heads and it's not 8%
I worked with a a broker to sell a business valued at 350k.
The valuation they used was basically 2.5 x net profits + cash in bank. Intangible assets were not considered - it all came down to net profit in the end. Which included an adjustment for a full time salary at market rates to cover my (part time) duties. It's rare for a business to truly run itself. Otherwise why not keep it when you move abroad and pocket the profit?
I think the agent charged 10%, no upfront fee. I definitely wouldn't use an agent who charged upfront. Seemed fair to me, as they had legit buyers lined up soon enough over 10% what I expected to reach.
I pulled out in the end for unrelated reasons, but it was legit. They sold at least one business a week. Don't pay upfront!
The valuation they used was basically 2.5 x net profits + cash in bank. Intangible assets were not considered - it all came down to net profit in the end. Which included an adjustment for a full time salary at market rates to cover my (part time) duties. It's rare for a business to truly run itself. Otherwise why not keep it when you move abroad and pocket the profit?
I think the agent charged 10%, no upfront fee. I definitely wouldn't use an agent who charged upfront. Seemed fair to me, as they had legit buyers lined up soon enough over 10% what I expected to reach.
I pulled out in the end for unrelated reasons, but it was legit. They sold at least one business a week. Don't pay upfront!
Edited by aparna on Tuesday 29th June 12:25
Al Gorithum said:
Nobody's really interested in the turnover, so expect 2 to 3 x net profits plus value on the balance sheet. Good luck with the move abroad
I agree regarding the turnover - as to the move bought a house already and can't wait to be there... but I know It will take time to close this current chapter. Al Gorithum said:
Nobody's really interested in the turnover, so expect 2 to 3 x net profits plus value on the balance sheet. Good luck with the move abroad
This, plus their might be an adjustment on the profit if the owner / manager takes minimal salary and takes the income as a dividend. For a small company I would look at internal buyout.
CubanPete said:
This, plus their might be an adjustment on the profit if the owner / manager takes minimal salary and takes the income as a dividend.
For a small company I would look at internal buyout.
Yep.For a small company I would look at internal buyout.
I've seen plenty of small businesses sell to the employees or a single employee.
I would start by asking your manager/assistant manager if they are interested in purchasing.
It should be noted that often the price of a small business is dictated by what the potential purchaser can realistically afford/borrow. If there are numerous interested parties, then great, but if it turns out that one of your employees is one of the only people who seem interested in buying it, then the asking price may be slightly limited.
I would have a browse through here, as this lists numerous songwriting businesses for sale in the UK:
https://uk.businessesforsale.com/uk/search/sign-ma...
You will have to do a bit of sorting wheat from chaff there, but it will give an idea of asking prices and what equipment and premises they are including, or not.
Lord Marylebone said:
https://uk.businessesforsale.com/uk/search/sign-ma...
You will have to do a bit of sorting wheat from chaff there, but it will give an idea of asking prices and what equipment and premises they are including, or not.
Interesting read for sure - thanksYou will have to do a bit of sorting wheat from chaff there, but it will give an idea of asking prices and what equipment and premises they are including, or not.
I would avoid any kind of advisor / agency unless:
1. you have exhausted all potential buyers that you can approach yourself - customers, suppliers, competitors, staff, etc, and
2. the business is valuable enough that a professional team can add more than they will cost, bearing in mind that costs are significant
Also remember that many of the agencies that offer an apparently low cost will ask you to sign an agreement that gives them a right to claim costs and fees after change of ownership whether they have sold your business or not. The less-reputable ones may just sit back and do nothing but wait.
1. you have exhausted all potential buyers that you can approach yourself - customers, suppliers, competitors, staff, etc, and
2. the business is valuable enough that a professional team can add more than they will cost, bearing in mind that costs are significant
Also remember that many of the agencies that offer an apparently low cost will ask you to sign an agreement that gives them a right to claim costs and fees after change of ownership whether they have sold your business or not. The less-reputable ones may just sit back and do nothing but wait.
aparna said:
A note on caution on competitors, Even if you haven't much to hide, just be aware time wasters are more likely from close competitors. There is not much downside, for them to go through motions and conduct a bit of recon, if proacticively approached.
Agree but run any comms via your accountants to divulge the minimum. Gassing Station | Business | Top of Page | What's New | My Stuff