Client wants to sell very successful business due to long term illness. Staff have been made redundant. The company has been so successful largely due to his personal talent, I believe.
He spoke to a company (A) who specialise in business sales. They said they thought he could get £250k. He must pay £3,000 fee upfront before they'll do any prospecting for clients. On sale of business their final fee would be another £12k. They said there would an earn out period of about a year where client would still need to act as consultant/nurse the customers.
My client has an impressive customer list, and I am sure someone would buy that. The idea that anyone would want to pay for the vans and other equipment doesn't seem likely to me. Client is well-known/highly respected in his field, and A has told him the high quality of his brand will make it all a no brainer. What I can't get my head around is the fact that the business is worth anything like this amount without the longterm skills of my client. I would have thought the only value would be in the customer list and that he should sell off his vans and equipment sooner rather than later.
It sounds very rosy, but I am concerned. I had another client who tried these business sales companies a few years ago and found them to be rather dodgy, both in their promises and in their delivery. His business was a bit more niche than this one is, however. That other client eventually sold his business to a much larger company, having done all the prospecting himself. My current client doesn't have the energy to look for buyers, unfortunately.
I have told client of my reservations, that it could be £3k down the pan and a whole lot of frustration.
What have you heard about using these business sale companies, both good and bad? What about just selling the customer list?