Urgent help needed - business

[GreyCloud81]

Hi, I need some urgent advice please.

I run a hot tub hire business with my (now ex) partner. We purchased the business last May, and have since grown the business quite a lot.

This is / was our secondary employment, as we both work in different industry full time.

The split between me and my partner is not great, and things are not very amicable between us, due to the circumstances.

I would therefore like to sell the business as soon as possible. As this is just adding to my stress, worry and everything else that i have to deal with, not helping my MH and would appreciate anyone’s advice on what to do.

The business was purchased for £900.00 last year. The previous owner, just based the business value on the assets at the time of purchase. But realised that after shaking on our purchase, that this could have potentially been worth a lot more.

Since purchasing the business, we have expanded the business social media / online portfolio, replaced items, and increased hot tub numbers.

Since taking over the business our gross has been £15k

With a net profit of £13,500. (Minus the equipment replacement, chemicals, insurance etc).

How can I value the business for a quick sale?

One of the reasons that I want a quick sale, is because we have a number of bookings in place for the rest of the year. (Total value of bookings £2k) I cant physically honour these on my own, and therefore would have to cancel. As this business is “area” based, I don’t want to depreciate the value of the business by letting people down, or cancelling bookings last minute. We are receiving enquiries daily (8 today) and I’m just having to say at present no bookings are being taken, this is loosing custom to who ever could potentially purchase the business.

The other reason is that I would like to remove my ex partner from my life. (Whole new thread)

I would just like an estimate to what the business is worth. My worry is that I would under estimate value the business and agree to a sale. As I have no contact with my ex partner, this can’t be discussed. However I am to transfer his 50% of the sale value. I am wary that if I do under estimate the value of the business, that he could take action against me.

Thank you for your advice!

Sorry but I’m quite new to MN, and don’t know which board gets the most traffic or responses for this sector / question?

Can’t see how it can offend someone? By simply asking a question?

@GreyCloud81 I have no advice to offer OP but I just wanted to say @RustyShackleford that there was no need for your downright rude and arsey response.

OP. Try posting under _Chat subject

Unless you have contracts with end clients that guarantee a revenue stream, you’ve got nothing. To be honest the only value is likely to be stock. You won’t have any goodwill in a short period of time. What would they be buying?

@YeahYeahYeahyeeeeah
Thanks for your reply. I’ve valued the stock and assets for the business.
I had someone come and view the company today, who could complete valuations. They said there is some merit in the customer base and bookings that we have. But obviously as I am not taking any more bookings, this is damaging to the business.

They have given me a guide price, and have offered to put the business on the market for me. But it seems a very high selling fee. There valuation however is more than I expected.

I’ve had a few people who have contacted me in reference to the business, so I’m just going to ask them from offers in the region of £x If I struggle to sell within a short time frame, I’m will reduce and take an offer.

I’ve sent my ex a letter explaining the process I am undertaking and a copy of the valuation received. Hopefully this will stop it biting me down the line.

@incogneto thank you

Just be aware that valuation methods vary wildly. My client with a £1M business still has no buyer, as all valuations aside, someone also needs to want it. I’m not trying to pee on your parade, but reality can be different.

I'd cut your losses and walk away. Leave him to it.

Thanks for the replies @yeahyeahyeahyeeeeah I’m not under any illusion that it may sell for this valuation, and that a business is only what someone is willing to pay for it. If it was down to me, I would walk away, and sell it for asset value only and sell this individually. Only problem is I don’t want him to turn round and say that I have done this out of spite, and that I had authority to do so.

I am speaking to one of his family members later, hopefully can get some clarity.

I have worked in Acquisitions ( different sector though)
Selling a business can be tricky, especially with more than one owner, and especially if the owners aren’t on the best terms.
It’s good that you have some offers though and hopefully if you have a firm one in writing your ex might just want the money and agree
You will probably have to get solicitors involved though

@Hoppinggreen
I’ve spoken to his mum. She said that he said i have no rights to the company and that she is taking it on, and will come and collect the assets this weekend.
I’m trying to find a solicitor ASAP, as I have proof that I purchased the assets and have a right to the business.

Having paperwork will help and of course you shouldn’t let anyone take any equipment
Do you have an an Accountant? They may be able to advise as it largely depends on the way the company is set up.
Unfortunately you may also find that at even the hint of an internal disagreement your buyers will be much less keen

Selling a private business is tricky and there is not a ready market. Really it’s worth what someone will pay or what you could otherwise get for the assets.

@HoppingGreen
I did all the accounts for the business and his other full time business. I have proof of all the purchases, and my bank statements.

This was our secondary business and not day to day living. We where using it to save up, for our future.

There is no competition in our area, and it’s popular. So I’m hoping someone will buy it.

I’ve decided just to leave everything for 14days, and seek legal advice.

I appreciate that but if it does end up getting legal you will probably find that your buyers disappear as without firm proof of ownership it’s hard to buy a business as you can’t establish exactly who you should be buying it from. It’s not about who does really own it it’s about showing legally who does if that makes sense. If the business is only worth a couple of thousand £ anyway legal expenses will eat up anything you can make from selling it.
However, if there is nothing on paper and you don’t need your ex to sign anything I might just be inclined to sell it without mentioning him at all (or even telling him) and then send him a cheque

Two issues. Firstly, is the business actually yours to sell. Secondly, how do you value the business.

When you bought the business from the previous owner, did you have a contract? Have you registered as self employed, either as a sole trader (just you) or in partnership with your ex? Alternatively did you set up a company? The ownership of the shares and whether or not you are a director will help determine if it is yours to sell and the decisions you can make.

Secondly, the base valuation would be the value of the assets. Goodwill is only worth what a buyer is willing to pay. Without long term repeat business, you will struggle to get a high premium for it. It sounds as though you may struggle to find a buyer, so start by value g your tangible assets, then be prepared to negotiate.

Finally, you say you want your Ex out of your life. Your ex can easily use the business to manipulate you and hamper any sale. It may be cleanest to cut your losses and move on.