Selling a Ltd Co. the how to/ where to go etc
Discussion
After a bit of advice if anyone knows about these things.
I have an opportunity to move into something else in foreign climes but currently run and own my own business. The basics are we are an IT company predominently in a vertical market (Education). Turnover £600k a year GP £250k and net at pre tax of £140k. 3 year old business and still growing massively with 4 full time staff and more required soon, none of which are capable of running things to be honest so thinking a better option is to sell. I have no idea of the worth or where I should go to, talk to about possibly selling up. I cant really run things from abroad as my role is full time and I wouldn't trust anyone to take over that role on a salary with my overseeing things thousands of miles away, even though I'm sure I would still generate a decent second income from the dividends etc.
I figure some of my more local competitors might want it but I don't especially want to talk to them directly as I know they would put word around that I am thinking of selling which could impact renewals on service agreements etc.
Anyone have any advice at all?
Thanks
I have an opportunity to move into something else in foreign climes but currently run and own my own business. The basics are we are an IT company predominently in a vertical market (Education). Turnover £600k a year GP £250k and net at pre tax of £140k. 3 year old business and still growing massively with 4 full time staff and more required soon, none of which are capable of running things to be honest so thinking a better option is to sell. I have no idea of the worth or where I should go to, talk to about possibly selling up. I cant really run things from abroad as my role is full time and I wouldn't trust anyone to take over that role on a salary with my overseeing things thousands of miles away, even though I'm sure I would still generate a decent second income from the dividends etc.
I figure some of my more local competitors might want it but I don't especially want to talk to them directly as I know they would put word around that I am thinking of selling which could impact renewals on service agreements etc.
Anyone have any advice at all?
Thanks
You should start by talking to your accountant to see if they have a Corporate Finance department/function, who would be able to assist you with this if not they may be able to recomend someone to help you.
There are business brokers that can assist, but they are of varying qualities and some will value your business highly to get you on the hook, then charge you a substantial upfront fee and then not do that much. There are of course some very good brokers out there as well.
It is well worth seeking advice, it may cost you but could prevent you making a costly mistake. We have also seen on a number of occassions where purchases and vendors take no advice, agree the deal, then speak to each others advisors and all sorts of queries come out, which can then break the deal. Is it a share sale or goodwill is a good starter, you need to understand the implications for both parties.
The net profit that you quote of £140k, is that adjusted for non commerical items, for example if you were running a yacht/plane (extreme I know) through the business this should be added back to the profit. On the other hand if you are involved full time and not taking a salary this should be deducted to get the maintainable earnings.
You also need to think about how you will be paid, cash up front, earnout, deferred etc. Will restrictive covenants be an issue for your other ventures, if so they need to be addressed at the outset. Although given the overseas element this is unlikely to be a problem.
The value of the business will be what someone is willing to pay. The following might give you an indication of the multiples in a SME business - this should never be taken as conclusive though:
http://www.uk200group.co.uk/nmsruntime/saveasdialo...
I hope this helps
There are business brokers that can assist, but they are of varying qualities and some will value your business highly to get you on the hook, then charge you a substantial upfront fee and then not do that much. There are of course some very good brokers out there as well.
It is well worth seeking advice, it may cost you but could prevent you making a costly mistake. We have also seen on a number of occassions where purchases and vendors take no advice, agree the deal, then speak to each others advisors and all sorts of queries come out, which can then break the deal. Is it a share sale or goodwill is a good starter, you need to understand the implications for both parties.
The net profit that you quote of £140k, is that adjusted for non commerical items, for example if you were running a yacht/plane (extreme I know) through the business this should be added back to the profit. On the other hand if you are involved full time and not taking a salary this should be deducted to get the maintainable earnings.
You also need to think about how you will be paid, cash up front, earnout, deferred etc. Will restrictive covenants be an issue for your other ventures, if so they need to be addressed at the outset. Although given the overseas element this is unlikely to be a problem.
The value of the business will be what someone is willing to pay. The following might give you an indication of the multiples in a SME business - this should never be taken as conclusive though:
http://www.uk200group.co.uk/nmsruntime/saveasdialo...
I hope this helps
Edited by wattsm666 on Thursday 19th August 08:36
Gassing Station | Business | Top of Page | What's New | My Stuff