Signature Acquisitions Case Study No 1
Date04 May 2022
CategoryGuides & Helpful Hints
In 2021 & 2022 Signature Acquisitions acted in the sale of The Examiner Shop which is a local Newsagents in Port St Mary. The shop owners had decided to retire but wanted to pass the business, which performs a valuable service within such a small community, on to new owners who could provide continuity. The business was long-term profitable and had been an essential service during the IOM lockdowns and as such was a good investment proposition for any new owner looking to get into retail.
Confidentiality is key! Whether the business is being listed openly on our website or privately marketed the confidentiality of our client’s business information is key. So despite marketing this business on our website at the general enquiry stage no financial information was sent out to any enquirer and if after receiving a general business overview an interested party wished to see commercially sensitive information (such as the accounts and the business lease etc) a confidentiality agreement was required to be signed first. These agreements can be shipped straight away electronically and executed via PC, Tablet or phone.
A meeting was set up with the owners to discuss their business and selling goals. We then put together a custom marketing plan and business description - which was sent for the owners approval which formed the basis of our marketing plan. The business was then marketed across all of Signature Acquisition’s media channels and to our exclusive mailing list. We handled all enquiries. We filtered and re-directed all serious enquiries to the seller and agreed how they wished to proceed. Then under confidentiality agreement we sent out information to all interested parties. During regular calls our consultant gave updates and guidance. There were many interested parties and ultimately we found the right buyer for the business with the two parties coming to an agreement and exchanging contracts for the sale in February 2022.
Throughout the process of dealing with several interested parties before a sale was ultimately secured we make the following observations that both buyers & sellers of businesses need to be aware of as negotiating a property sale and negotiating the sale of a business as a going concern present two very different challenges. Not least:
- Each buyer will have a different view on the accounting information presented. If unsure on how to interpret the financial information provided you should get a qualified accountant involved.
- Any business goodwill value is often intangible and generally relies on the perspective of the buyer as to how much future business the existing business goodwill will secure for them
- Understanding commercial leases is important as most businesses operate this way. Again if unsure you should seek professional advice
- With any retail business you will need a certain amount of stock to continue trading. Agree stock values and check supply contracts with the seller in advance.
- As a buyer you may need to consider business banking & card processing facilities in order to continue trading. Will these transfer over with the business or do you need to set up agreements afresh?
- Some buyers will have cash & some will need to raise finance. Raising finance is not as straightforward as getting a mortgage on a residential property and we have lenders who can help where required.
- Above all can you see yourself running the business in question? Buying a smaller business is an emotional as well as a financial investment.