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8th February 2012   3 times as many enquiries

Here's an interesting statistic.  We advertise our client businesses on a website called www.rightbiz.co.uk.  This is a big site with lots of businesses advertised for sale.

Although we only have 0.07% of the total number of businesses advertised on there we get 0.22% of all email enquiries.  In other words we get 3 times as many enquiries as a proportion of our presence on the site would indicate. 

Is it because we write better ads?  Who knows but if you are thinking of selling your business then consider using a broker with a 300% better enquiry rate. 



26th January 2012     Negotiation Negotiation Negotiation

Have we lost the ability to negotiate?  In the last week I have spoken to two prospective business buyers about two very different types of business.  Both of them said they were very interested in my clients' business but neither were prepared to put in an offer.

Why?

In both cases they considered the business to be overpriced (although one lady hadn't even completed an NDA and requested accounts, psychic maybe?).  Fair enough, but surely you expect the price to be a moveable feast and open to negotiation don't you? 

I go to some trouble to advise my clients as to what I see to be the right price for their business.  In 90% of cases we always set the price at a higher level for two reasons:
1. to give negotiating headroom. 
2. as all businesses continue to trade and develop whilst on the market it may be that the valuation does actually improve: setting the price at a higher level than perhaps a current-day valuation leaves a cushion to allow for this.

Maybe I have got it wrong but surely one should consider whether the business is of interest then go about discussing the price.  Why pull out before getting to price negotiations?  Especially if the business is suitable in every other way.


17th January 2012     Are you being served?  Part 2

In the last week or two I have:

• Put together 2 Heads of Terms
• Read through a Sale and Purchase Agreement on behalf of my client and his solicitor
• Drafted a letter on behalf of a client to advise his customers of the takeover of his company
• Met with a client and his accountant to discuss some of the taxation aspects of his business sale
  

All enjoyable and necessary stuff and in my view, part of the job.

Having read a few business forums in my time I think the perception of brokers is very varied.  We offer a really quite comprehensive service encompassing consultancy, expert opinion, administration, sales and occasionally some counselling.

In some ways it would be nice if this job simply involved getting on with selling but the list above shows what variety there is in this job and, well, variety is the spice of life.

Keith Green - Partner, Anderson Moore

9th January 2012       Are you being served?  Part 1

What do buyers and sellers expect from the broker or agent selling a business? 

For the buyer you surely expect the broker to have a reasonable factfile on the business and to obtain much of the pertinent data to explore the business prior to offer and due diligence etc.

For the seller you would also want your business to be effectively marketed and presented, would you not?

Why then do so many businesses find themselves represented by volume brokers with little or no interest on any individual client?  I occasionally work for buyers and have recently completed an NDA to obtain details of a small Printing Business for a good quality, cash buyer.  Despite chasing the broker (a large national name) I have had no response and no information.  My client has given up and moved on.

Our businesses are well-represented and I would usually have, as a minimum:
3 years Accounts
Latest management or trading figures
Asset List
Staff Schedule

A recent statistic sent to me by a guy who has worked for a major M & A firm (he got the data from Coutts and Co.) is that only 7% of UK SME businesses marketed for sale last year were actually sold.  Our success rate is 60%.  I wonder if the Print Business in my story above has been sold yet?
















Top Tips in Selling Your Business)   Be wary of MBO'

Management Buy Outs (MBO).  An MBO may sound great but watch out for the management team losing sight of their main responsibilities when trying to structure the deal or for a demotivated management team if the deal falls through. Generally, a higher price can be achieved from a trade buyer but a trade buyer will not wish to compete against an MBO.

Make sure your information is up to date.  Nothing puts a potential buyer off than lack of up to date information.  This includes Statutory Accounts, Management Accounts, Staff Contracts of Employment, Staff Handbook, Copies of Leases, Asset Lists etc etc.

Appoint a Solicitor.  The sale of a business is a legal transaction so it make sense to have the sale conducted professionally, with your interests properly protected.  Make sure that your preferred Solicitor has experience in conducting your particular type of business sale, that they can work to an agreed fee and timescale.