29/03/2007 by info.

What do you do if you want to sell a small business that’s not worth a huge amount of money?  Your options seem to be pay an agents full fee which if you are not vat registered could be over £4,000 (a huge slice of your £15,000 proceeds) or do it yourself. 

I have valued numerous small businesses and met with a large amount of small business owners who are in this position, and basically because it doesn’t cost anything less to sell a small business as it does to sell a larger one, the conclusion from the owner was that he could not afford our services.

Vandervells have however now developed a service aimed at these business owners which is not a full service but aims to help the business owner sell his business himself and only costs a proportion of the full fee.

For more information visit the Vandervells website at www.vandervells.com

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06/03/2007 by info.

If you want to sell your business who do you approach?  That’s the burning question.  The simple answer is that you should always ask other business owners for recommendations, they know the truth about agents either because they have bought a business via an agent an know how they were treated or have used an agent as a seller.

What if you don’t have a recommendation, how do you know which agent to choose.

It’s a difficult one, however it isn’t necessarily the right choice to use the largest Business Transfer Agent in the country.  Why?

Firstly if an agency lists 7,000 businesses how much time are they actually devoting to selling your business.  Do the maths.  They will pick up your file together with the files of 35 other businesses on on 6 March 2007 (a total of 15 minutes in a year), assuming they work though all their clients and give equal time to all clients, it will be a year before they devote another 15 minutes to selling your business. 

But you say they have become the largest so they must sell businesses.  Perhaps they sell a few but as a percentage it will be very small perhaps 1 - 2%.

So how do they get the money to continue trading?  The truth is that they spend all their resources not on selling your business but on obtaining new instructions.  Their listers are instructed to obtain £1,000+ in upfront fees for every business they gain the instruction. 

And the punchline is that their listers get paid a large percentage of this £1,000 which goes straight into their pockets rather than into selling your business.  The rest into supplying glossy marketing material.

How do they pursuade business owners to part with this money?  Well they over value your business, and tell you that your business is worth twice as much as is really is, and of course they are the largest business transfer agent in the country so they know what they are talking about don’t they.

They know how to grow their business at the expense of their customers that’s all.

Who am I talking about?  Just look at Dalton’s Weekly magazine and you will know.

DO NOT BE FOOLED! 

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30/01/2007 by info.

I can fully appreciate how business owners want to get the best price for their business when they want to sell.  After all, it is often the second highest transaction, in terms of value, they will have in their life, behind selling their house.

What I find strange is when selling a business, owners often loose their business acumen.  Let me explain.

In the UK there are business transfer agents who “buy a listing”.  And what I mean by that is to over value a business in the hope that the owner will instruct them.  Small businesses simply do not sell for 3.5/4 times profit in the UK, however owners are fooled time and time again into instructing the agent who tells them it is worth the highest figure.

I will not mention any names however if anyone would like to make comments they are welcome to do so.  Needless to say these agents are the ones with glossy marketing material and, here is the punchline, want a large upfront fee before they will take the business on their books.

Amazingly, business owners pay this fee often over £1,000 again and again.  The irony is that this money pays for the glossy material that fooled them, and it also means that the agency is making enough money so that they do not actually have to sell the business they have just been instructed to sell.

The fact is small businesses are valued at around 1 and 2 times profits depending on the individual circumstances of that business. 

And when the owner is desperate to sell because they have wasted 2 years of their life with this agent, they reduce the price dramatically down, incidently to either the market value or even below.

So if you are a business owner wanting to sell your business, keep your business acumen, and learn your businesses value before you instruct an agent, you could save yourself a lot of pain and money. 

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