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Where / how to sell my business ?

(13 Posts)
BumblebeeBum Tue 10-Jan-17 15:06:14

I have a business that I have built up over the last 4 years and now makes £27k a year.

I need to move on to pastures new (ill health) so would like to sell. What I get for the business will be a deposit so I can finally buy a house (single mum of 2) so I need to maximise returns.

Does anyone know how to value the business? I was looking at 3 x earnings plus stock value. Does that sound the right ballpark?

Secondly - does anyone recommend any places to sell the business? A quick google only offers dodgy looking sites so I'd really appreciate recommendations!

Thanks!

anotheryearcomesandgoes Tue 10-Jan-17 18:10:50

What kind of business is it? Does it have physical premises? Where to you get stock from (i.e. is it something unique)

When you say it makes £27k- what do you mean by that? Is that what you take home in salary and dividends?

Is it a limited company? How many staff? How many hours a week do you work at it ?

Unless you are a limited company with premises it sounds more like a stock buy out plus a few thousand goodwill business.

anotheryearcomesandgoes Tue 10-Jan-17 18:11:27

Plus- what do you mean by 3 x earnings plus stock?

Badbadbunny Tue 10-Jan-17 19:11:52

3 x earnings is VERY optimistic for a small owner-managed/run business.

All depends on what type of business is it as said above. Very different values for something like a shop/cafe with that profit as opposed to a "knowledge" based business such as a web-designer. Also very different routes for marketing/selling it. Again, very different values as to whether it runs itself or whether you/the owner have to work full time in it.

Over the last couple of years, I've acted for the purchasers of two different businesses, both profitable and owner managed/run, and in both cases, the agreed price was closer to 1 x earnings plus stock.

anotheryearcomesandgoes Tue 10-Jan-17 19:39:57

Also need to know how you draw the £27k from the business

FannyUmbongo Tue 10-Jan-17 19:48:25

3x earnings seems a bit ambitious.

What type of business is it?

BumblebeeBum Tue 10-Jan-17 21:33:03

Thanks all for your comments.

It's a limited company. Income drawn as dividends as per accountants recommendations for tax efficiency. One member of staff, other than me. Rent part of a warehouse and some stock at home. Takes around 6 hours a week from me.

It's a baby sling rental/retail businsss.

3 x earnings plus stock means just that. Not sure how else to phrase that?

What valuation method do you recommend if you think p/e doesn't work?

Any ideas for where to sell at all?

anotheryearcomesandgoes Tue 10-Jan-17 22:13:27

What tenancy arrangement do you have on the warehouse?

I was trying to be clear what you were defining earnings as- which would depend on business type? So post tax profits? For how many years has it been at £27K?

What stock value do you hold?

anotheryearcomesandgoes Wed 11-Jan-17 07:17:06

It is quite a niche business .

Do you need any qualifications/accreditations? (I see that the similar websites mention this) Do you meet clients in person to advise them? What would happen if the employee left- could anyone off the street do their job or is it dependent on them?

Companies house suggests that a lot of similar type businesses fold. Some also seem to be charities/non profit/co-operatives?

If it is making £27k for 6 hours work and you want the money for a house deposit unless you are in a position to buy immediately you might be better just to start accumulating the profit and keeping the business.

SummerSazz Wed 11-Jan-17 07:23:02

You simply haven't given enough info to try and reach a value unfortunately. Any buyer may not want to take on an employee/warehouse commitments etc. Is £27k after all costs (direct, overhead, corporation tax?)

BumblebeeBum Wed 11-Jan-17 07:44:24

Yes £27k after all costs, consistent for 2 years, Steady growth before then.

Yes it's niche. Not a charity and no risk of folding. I intend to sell and work elsewhere so will still be bringing in money. No qualifications needed, employee does admin. She's great at her job but business is not dependent on her. Warehouse is the opposite of a commitment - they deal with lots of stuff so I don't have to.

I have a large document prepared with all facts and figures for prospective buyers which they can look at once they have signed a non disclosure document.

It was more the places to market the bsiness I was after. I thought perhaps people on this board had sold a business before and could recommend somewhere to advertise a business for sale. Can anyone help?

Badbadbunny Wed 11-Jan-17 08:34:53

Beware of the national business sales agency chains. They'll give you a high valuation to sucker you in and want to charge you a few thousand upfront "towards advertising". They make their profits from that advertising and if they manage to sell a business, that's icing on the cake. Usually, after a few months of no interest (due to high price), they'll suggest a price reduction and another upfront payment for more advertising, and so it goes on, until you get back down to a more realistic price. I've seen loads of clients fall for it, so be warned!

One agency which I've not heard that kind of negative story about is Adams & Co who tend to be more local and deal with smaller businesses. , tending to give more realistic valuations and not the hard sell for upfront costs. Might be worth you googling for your local office and having a chat with them.

BumblebeeBum Wed 11-Jan-17 19:02:34

Thank you bunny! ;0)

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