06/11/2008 by info.

So the Bank of England has now reduced the base rate by 2% since September 2008, this was what was needed.

I attended a seminar in September 2008 run by the Telegraph Business Club in which Mark Berrisford-Smith Senior Economist with HSBC Bank plc told the delegates that if interest rates was not cut by 2% in the next day that the recession would be prolonged and deep. The cut announced was 0.5% as a result the stock exchange crashed.

The Bank of England have now taken that appropriate action, and rates have been cut to this level. It’s good to see that steps have now been taken to take us out of recesssion next year.

Good news for all businesses, buyers of businesses and sellers of businesses.

Posted in The Economy | No Comments »

06/11/2008 by info.

A recent report stated that:

“According to exclusive research carried out by Financial Mail recently a staggering 60% of small business owners are delaying retirement due to the UK’s economic downturn.

One third of small business owners considering selling their businesses agree that the state of the UK economy has severely affected interested parties; with 20% suggesting the selling price had fallen, leaving them with little option but to continue working for longer.”

At least that is the story that has been reported, but perhaps the truth is more likely to be this.

Business owners are quite happy if an agent informs them that their business is worth a lot of money. Recently there have been a number of agents who have valued business at up to twice the probable selling price. They then take a large up front fees from their new client and the client is happy to pay this if they can get the amount of money the agents suggests the business is worth.

The seller decides at the same time that if my business is worth this amount of money that they can afford to retire.

Now what has happened of course it that these businesses that have been placed on the market have never sold for one reason - they are overpriced!

So the seller then contacts the agent who trying to cover up their deceit suggests that if they want to sell they would need to reduce their asking price, and justifies this by blaming the economy.

Of course they cannot afford to reduce the price because the ONLY reason why they placed their business on the market in the first place was because IF they received that amount of money for their business they COULD afford to retire.

The truth is however that their business was NEVER worth that amount of money in the first place and they started to make plans to retire based on an assumption that was not true.

So sometimes a reporter not really understanding the background behind a story gets the wrong end of the stick.

Business values have remained static since the early 1990 recession and haven’t changed significantly since then.

I would suggest that the truth is that there simply isn’t any evidence that business values have fallen significantly rather reality has kicked in regarding the true value of businesses in the UK.

Sellers had fallen for the age old “buying a listing” trick used by business agents and estate agents to increase their portfolio of clients. In other words overvaluing.

If you want to sell your business don’t be conned into using a particular agent just because they suggest that they can get more than any other agent, you will find that you have fallen for this trick.

Posted in Selling Your Business, Business transfer agents, The Economy | No Comments »