Selling a Small Business HELP

nonnatus

I'm selling a small, internet based Business. It's about 10 years old and makes a very healthy net profit every year.
There is a warehouse full of stock that will form the bulk of the sale. I have decided what price I'd like to get.


I've advertised it using a "sell your business wiv us . com" kind of website. I pay a small amount to advertise for a month and that's as far as the website goes, it doesn't help with selling. It just introduces me to potential buyers.


And it has! I've been inundated with replies! Some are plainly weird, some are just being nosy I presume, some are my competitors trying to sneak a look at the ins and outs, but a few seem to be genuinely interested. As I've never done this before, could anyone advise how things are done?


I've provided lots of info about the business to the genuine people, along with a recent Profit and Loss sheet. These people have told me a bit about themselves and how they see my business working for them.


I'm now being asked for 4 years FULL accounts, which my Accountant is reluctant to disclose because he says it's irrelevant what my tax position etc is in regard to the sale. He says the P&L illustrates sales, costs and profit - why do they want more? So could I just send 4 years P&L?


Do I need a Solicitor? (I told you I was really dumb! I thought maybe we needed only one solicitor between us, in which case, couldn't the buyer pay for it??)


Is there a logical next step? ie if it were a House sale, I'd want to know that they had the funds, can I ask that question in this circumstance?


And any other pointers you might have or advice you think I need please!

Pennywise

Unless the business is a limited company and you're selling the shares in the company, i.e. selling the company, then your accountant is right that there's no need for the buyer to see full accounts. Just providing 3 years of detailed P&L is the standard. So, it's up to you whether to provide them or not, i.e. risk losing a sale!

Yes, you certainly do need a solicitor, and no, you can't "share" one between buyer and seller. Your solicitor acts for your best interests and their solicitor will act for their best interests. It's a matter of protecting yourselves against the other. Having just one solicitor would be a conflict of interests and any decent solicitor would refuse to do it.

You've cut out the "middle man" by offering it yourself instead of using a business sales agent, so everything they'd do, like negotiation, checking available funds, etc., has to be done by you or your solicitor.

Don't try to DIY the final sales process. It's far too easy for the buyer to include nasty clauses in a sales agreement which may look harmless to the amateur, and it's easy for clauses which would be important to you to be missed out.

zygurat789

nonnatus wrote: »

I'm selling a small, internet based Business. It's about 10 years old and makes a very healthy net profit every year.
There is a warehouse full of stock that will form the bulk of the sale. I have decided what price I'd like to get.




I'm now being asked for 4 years FULL accounts, which my Accountant is reluctant to disclose because he says it's irrelevant what my tax position etc is in regard to the sale. He says the P&L illustrates sales, costs and profit - why do they want more? So could I just send 4 years P&L?


Do I need a Solicitor? (I told you I was really dumb! I thought maybe we needed only one solicitor between us, in which case, couldn't the buyer pay for it??)


Is there a logical next step? ie if it were a House sale, I'd want to know that they had the funds, can I ask that question in this circumstance?


And any other pointers you might have or advice you think I need please!

No wonder you've had a lot of replies. What you are looking to sell when you sell a business is goodwill, basically profitable turnover. You would then sell stock at valuation and any fixed assets at valuation. Be sure you sell each categaory as a different item because the tax treatment is different.
Goodwill is very difficult to value because it is intangible. After charging a market rate salary for the work you do the net profit is the income. Given that all businesses are risky at say 10% how much capital would you require to produce that income? Your accountant should have another couple of ways.
I'd just send 4 yrs P & L and you don't need a solicitor but get the money before you sell, no loans.

Aquamania

nonnatus wrote: »

I'm selling a small, internet based Business. It's about 10 years old and makes a very healthy net profit every year.
There is a warehouse full of stock that will form the bulk of the sale. I have decided what price I'd like to get.


I've advertised it using a "sell your business wiv us . com" kind of website. I pay a small amount to advertise for a month and that's as far as the website goes, it doesn't help with selling. It just introduces me to potential buyers.


And it has! I've been inundated with replies! Some are plainly weird, some are just being nosy I presume, some are my competitors trying to sneak a look at the ins and outs, but a few seem to be genuinely interested. As I've never done this before, could anyone advise how things are done?


I've provided lots of info about the business to the genuine people, along with a recent Profit and Loss sheet. These people have told me a bit about themselves and how they see my business working for them.


I'm now being asked for 4 years FULL accounts, which my Accountant is reluctant to disclose because he says it's irrelevant what my tax position etc is in regard to the sale. He says the P&L illustrates sales, costs and profit - why do they want more? So could I just send 4 years P&L?


Do I need a Solicitor? (I told you I was really dumb! I thought maybe we needed only one solicitor between us, in which case, couldn't the buyer pay for it??)


Is there a logical next step? ie if it were a House sale, I'd want to know that they had the funds, can I ask that question in this circumstance?


And any other pointers you might have or advice you think I need please!

As a potential buyer, they can ask for anything they want.
As a seller, it's up to you whether you wish to honour or deny the request. Be aware that until a contract is signed, any potential seller may decide to walk away if they are unhappy to proceed for any reason.

With regards to asking potential buyers their financial position, as a seller of something they are interested in buying, you can ask the potential buyer anything you like. As a potential buyer, it's up to them whether they wish to honour or deny the request. Be aware that until a contract is signed, any potential seller may decide to walk away if they are unhappy to proceed for any reason.

Perhaps employing a professional agent who specialises in the sale of businesses would be better than attempting the DIY approach via an internet site

IronWolf

The audited P&L, Balance sheet, and cash flow statements should be sufficient for any potential buyer.

You don't have to have a solicitor, but given you dont know this person it is advisable to get one to make sure you dont get shafted.

Aquamania

IronWolf wrote: »

The audited P&L, Balance sheet, and cash flow statements should be sufficient for any potential buyer.

You don't have to have a solicitor, but given you dont know this person it is advisable to get one to make sure you dont get shafted.

The OP says it's "a small, internet based Business".

Therefore it is unlikely that any audited accounts exist
https://www.gov.uk/audit-exemptions-for-private-limited-companies

There's probably no cash flow statements in the existing formal accounts either.