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Client Selling Their Business Online

Client Wants To Sell Their Business Online But Doesn't Know Where To Start

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I have a client (Limited company £70k/year turnover selling cosmetics online) who want to retire. They trade from home in the North East.

They have no potential purchasers for their company (they have tried competitors, etc) and therefore are looking at listing their business for sale online. They are wary of contacting a company online they do not know as they are concerned many such companies are not legitimate.

Does anyone have any advice/contacts regarding companies who can assist them in selling their company?

Thanks in advance.

Replies (7)

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By mrme89
07th Feb 2018 09:31

Any broker worth enlisting won't touch this as it's too small.

Any broker that will touch it will want a fee for simply placing a few advertisements (they'll tell your client that the company is worth a fortune though). Their fee will be a large cut of the sale value for such a small company sale.

The client is probably best marketing the business themselves.

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Hallerud at Easter
07th Feb 2018 09:43

What is the profit?

On £70k turnover is there any real business to sell, by the time one allows for the value of the owner's time operating the business surely it is mainly a reward for his labour rather than a business with a value.

Obviously there is something to sell (customer lists) and presumably stock in hand but at that level of activity these surely cannot be valued at much.

How has your client arrived at the price he wishes to achieve, is he being realistic?

He could always try Daltons but he /you need to be really clear setting the price and being realistic.

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By stepurhan
07th Feb 2018 10:27

They have tried competitors. Presumably said competitors aren't interested. I'd say that indicates that there isn't sufficient value in the business to make it worth buying.

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Replying to stepurhan:
Hallerud at Easter
07th Feb 2018 10:59

Always depends on price, you can pretty much sell anything if you price low enough.

I suspect there may well be unrealistic expectations.

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Replying to DJKL:
By stepurhan
07th Feb 2018 11:43

DJKL wrote:

I suspect there may well be unrealistic expectations.

You're probably right.
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By Duggimon
07th Feb 2018 11:21

As others have said, with £70,000 turnover I would be surprised if the net profit was more than £25,000 for a retail business after considering purchases, delivery and overheads, and that's assuming there's no staff.

That's a fairly small salary for a business owner meaning the business isn't likely worth much more than a few thousand plus the value of stock and assets.

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By Clinton Lee
16th Nov 2019 08:57

I'm sorry I'm late to this party, but as others have stated

a) This is way too small to justify the efforts of any business broker
b) But that won't stop some brokers handing out a mouth watering valuation in order to take on the client (whether or not such client is paying an advance fee!)

But, also, this is too small for most buyers to consider. It takes time and money to investigate an opportunity. One needs to ask for the books, go through the numbers to try and find the fiddles, visit the premises etc etc.

From a buyer's point of view, it makes sense to invest that time only when

a) the business is a certain size and
b) the vendor somehow conveys right at the start that the business really is making a profit (even if he were charging a full market wage), that it has an upward sloping growth trajectory, that his price expectations are reasonable.

It's on the last bit that most vendors fail. The majority of their businesses are worth zilch, nada. They are jobs, not businesses. And they don't even pay minimum wage!

The businesses that do attract a buyer often get no offers more than 1x earnings.

But if the business owner still wants to list their business for sale I maintain the UK's most comprehensive list of marketplaces and portals for selling businesses.

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