Selling a business - who to talk to?
Discussion
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?
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?
What type of business operation is this? Agents tend to specialise in certain areas. Christie & Co for example, specialise in Retail, Forecourt, Pubs, Restaurants, Care Homes & Leisure. This sounds like a manufacturing business, in which case I'd probably advertise it myself in an industry specific magazine.
BTW, 3 1/2 x Net Profit as a valuation in the current economic climate sounds excessive, unless this is an asset based business with property/machinery included. Order books have little appreciable value in a business valuation model. Order books tend to garner a good level of interested prospective buyers, but rarely do they add a premium to the value of the business being offered. Need more info to give advice really. In case you were wondering, I was a commercial business agent/valuer in a previous life.
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.
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.
YRRunner said:
BTW, 3 1/2 x Net Profit as a valuation in the current economic climate sounds excessive, unless this is an asset based business with property/machinery included. Order books have little appreciable value in a business valuation model. Order books tend to garner a good level of interested prospective buyers, but rarely do they add a premium to the value of the business being offered. Need more info to give advice really. In case you were wondering, I was a commercial business agent/valuer in a previous life.
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.
Edited by superlightr on Thursday 30th August 12:52
seaninog said:
With apologies to Frimey111R I regret to say i had a negative experience with BCMS a couple of years ago.....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.
Apologies for that, we try to get it right all the time but sometimes this can happen. Worth giving us a second chance though...(you can always contact me directly too although I am the Marketing Manager and not one of the operational people).OP - can you post/PM details of the sector and location of the business?
Personally I'm always wary of brokers as although some are very good, unfortunately most are (in my experience) not. Depending on the sector, you may find that your friend's accountant/solicitor will be all they need - especially if the seller already has a pretty good idea of who is likely to buy the business (e.g. competitors/suppliers/customers) rather than just looking on a 'does anyone want to buy a business?' basis. Obviously, he'll need to make sure that he has a good solicitor/accountant - but I'd hope that was a given - otherwise, no matter how good the broker is, he's going to be in a mess.
Depending on location, I know a couple of accountancy firms who are running 'Thinking of selling your business?'-type seminars in the coming weeks/months. Obviously they'll also try to persuade him to use them, but it's not a pre-condition of going to the seminar and may be of interest. (I'm not connected to them, just on their mailing list of businesses for sale/wanted).
Personally I'm always wary of brokers as although some are very good, unfortunately most are (in my experience) not. Depending on the sector, you may find that your friend's accountant/solicitor will be all they need - especially if the seller already has a pretty good idea of who is likely to buy the business (e.g. competitors/suppliers/customers) rather than just looking on a 'does anyone want to buy a business?' basis. Obviously, he'll need to make sure that he has a good solicitor/accountant - but I'd hope that was a given - otherwise, no matter how good the broker is, he's going to be in a mess.
Depending on location, I know a couple of accountancy firms who are running 'Thinking of selling your business?'-type seminars in the coming weeks/months. Obviously they'll also try to persuade him to use them, but it's not a pre-condition of going to the seminar and may be of interest. (I'm not connected to them, just on their mailing list of businesses for sale/wanted).
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.
therealpigdog said:
OP - can you post/PM details of the sector and location of the business?
Personally I'm always wary of brokers as although some are very good, unfortunately most are (in my experience) not. Depending on the sector, you may find that your friend's accountant/solicitor will be all they need - especially if the seller already has a pretty good idea of who is likely to buy the business (e.g. competitors/suppliers/customers) rather than just looking on a 'does anyone want to buy a business?' basis. Obviously, he'll need to make sure that he has a good solicitor/accountant - but I'd hope that was a given - otherwise, no matter how good the broker is, he's going to be in a mess.
Depending on location, I know a couple of accountancy firms who are running 'Thinking of selling your business?'-type seminars in the coming weeks/months. Obviously they'll also try to persuade him to use them, but it's not a pre-condition of going to the seminar and may be of interest. (I'm not connected to them, just on their mailing list of businesses for sale/wanted).
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. Personally I'm always wary of brokers as although some are very good, unfortunately most are (in my experience) not. Depending on the sector, you may find that your friend's accountant/solicitor will be all they need - especially if the seller already has a pretty good idea of who is likely to buy the business (e.g. competitors/suppliers/customers) rather than just looking on a 'does anyone want to buy a business?' basis. Obviously, he'll need to make sure that he has a good solicitor/accountant - but I'd hope that was a given - otherwise, no matter how good the broker is, he's going to be in a mess.
Depending on location, I know a couple of accountancy firms who are running 'Thinking of selling your business?'-type seminars in the coming weeks/months. Obviously they'll also try to persuade him to use them, but it's not a pre-condition of going to the seminar and may be of interest. (I'm not connected to them, just on their mailing list of businesses for sale/wanted).
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