also need to understand the sector it’s in. If I’m selling a care home I have to know the standards applied, the staffing levels needed and the cost of care. As a business transfer agent, the amount of work you need to do on any individual business depends on how often you deal in that particular sector. After a while dealing with one kind of business, whether it’s care homes or pubs, you get to know how they work. You will tend to specialise in four or five different areas, as at any time one of them will be going through the doldrums.
Q How do you market a business?
A The market is different from the residential market – it’s a very narrow market, so you have to approach it in a different way. At the popular end, particularly with people who hadn’t run their own business before, the big sellers used to be post offices and pubs. You can advertise those fairly openly. At the other end of the scale, the
corporate end, there are fewer potential buyers. You can market these businesses without any advertising – the person buying will be in the trade already, or in an ancillary trade. So you approach them directly. It keeps a sale confidential. In specialised markets we’ve been able
to sell to a buyer already in the sector; for instance alarm installation companies, a safety products business – fluorescent vests, that kind of thing – printing companies and wholesalers. The range of size is very wide. You can
start from £3-4,000 for a lock-up business, but we tend to deal more with the upper end of the market where businesses can go for £5-10 million.
Q At the bottom end of the market, what kind of buyers do you find?
A Unemployment creates a market. Sometimes, unemployment actually makes people more free. People often want to run their own business, but have always preferred the reliable income that comes from a steady job. If they’re made redundant, often that’s what galvanises them into looking to buy a business. Some can be a little naïve with their
dreams of running a pub; they idealise the lifestyle and they’ve underestimated the work involved. My loyalty is with my client, of course –
I’m trying to sell the business for the best price – but if I feel there is something the buyers have overlooked, I may recommend they take advice.
£200,000–£500,000
BUSINESSESFORSALE.COM have this swish nightclub complex in Luton.
CHESTERON
HUMBERTS offer
Gweek Post Office and village stores on the Lizard Peninsula in Cornwall.
£430,000
Q What is the fee structure – is it all commission, or are there upfront fees as well?
A The average residential agent sells homes at £100,000 to £400,000, but we deal with businesses with values from £5,000 to £10 million. You can’t apply the same rate across such a wide spectrum. A house is a house is a house, but every business is unique, so the level of complexity is higher, too. So the commission as a percentage of the sales price can vary from one per cent at the bottom end to four, five or even six per cent, depending on the complexity of the business and the amount of work the agent has to do. Not everyone charges upfront fees, and you don’t need to charge them all the time. But where a business is very large and very complex, or has particularly high marketing needs for whatever reason, then an advance fee protects the agent. And an advance fee does sort out the dross, the businesses that really just aren’t going to sell, that aren’t really worth anything.
Q How do you go about the business of getting instructions? Is it similar to residential agency, in that you’re trying to get the individual business owner to use you rather than the competition?
A lot of the time it’s about individuals. You have to be interested in people and be able to get on with them, in the first place. I won an instruction to sell a Spar
supermarket when the owner’s Siamese cat came to sit on the settee next to me and curled up and went to sleep. Apparently it hadn’t done that with any of the other agents who called, so I got the job. I don’t care what I have to do to get instructions! We’ve also done a good bit of work for
banks – receiverships, especially care homes. Banks can be a good source of repeat business, if you give them a good service, so then you can have some regular work coming in.
Q What’s the mix of business? Has it changed significantly over time?
A The mix of businesses being sold changes all the time. When I started, Post Offices were very much in demand. Buyers who haven’t run a business before wonder how they will earn money – they see the annual accounts, of course, but they don’t want to have to wait for a year, so the monthly salary paid by the Post Office is a big attraction. So is the fact that the Post Office guarantees there will be no competitive outlets nearby. Post Offices are not selling at all at the
moment; because of the closure programme that finished last year. There’s still good demand for freehold
£1.85 million
CHRISTIE + CO are are offering this freehold petrol station in Ipswich.
pubs. There are a lot of leaseholds on the market, but they’re not selling. I think the pub companies and brewers have hurt themselves by putting rents up to levels that are unsustainable and where the pub landlord can’t make any money. There’s no incentive for the publican to develop the business because so much of the profit is going to someone else. Right now, we’re seeing a huge increase in the number of pubs that are being sold
PROPERTYdrum MARCH 2010 41
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44 |
Page 45 |
Page 46 |
Page 47 |
Page 48 |
Page 49 |
Page 50 |
Page 51 |
Page 52 |
Page 53 |
Page 54 |
Page 55 |
Page 56 |
Page 57 |
Page 58 |
Page 59 |
Page 60 |
Page 61 |
Page 62 |
Page 63 |
Page 64 |
Page 65 |
Page 66 |
Page 67 |
Page 68