Giving away a business !

Ratita_Presumida

My father had a roofing business which started in 1978, my brother worked with him from the age of 15 this was back in the 1980s, leaving school in them days early was accepted I guess. The business grew to a real money maker due to there reputation. I must admit even though they charged more for a flat roof customers were happy and word of mouth spread. My brother and my dad decided to go 50/50, nothing was drawn up at the solicitors which I said was a mistake. My brother never paid for his half of the business which I would imagine is very rare. All monies were split in the middle. My father retired in 2012 and gave my brother the whole business free of charge. 
The annual turn over I would imagine is roughly £100000.00 plus. The good reputation, discounts from builders merchants my father had used since the 80s, all this my brother received

I was never treated the same as my brother, I’ve struggled but I believe I’m a better person for that, How can you estimate a price on what this business is worth, surely people just don’t just give businesses away just like that even if there your own blood
my brother only needs to work twice a week, turning work down as he’s financially well off. He has a 6 bedroom house plus all the trimmings. 

I just want to know how much this business is worth. 

martindow

This looks like a question for the Family and Relationships board. Have you talked to him, your brother or other siblings about this? I assume that he is aware that his children see a perceived unfairness.

Your father was free to give his business away as he wished, but maybe he intends to compensate the rest of the family in other ways.

Things like this can be damaging for family relationships so I suggest that you approach this cautiously.

MalMonroe

But - your brother worked in the business. Whether or not he paid your dad anything to be part of it. Were you a part of it too? Did you work with and help your dad for many years? 

It seems to me that your brother has worked hard for what he has now. Why would you deny him that? Your dad and brother worked in harmony by the sounds of things. And worked very hard too.

It really does make me sad to see posts like this where there is such sibling rivalry and jealousy that people cannot see straight and just want the money. 

Your brother is probably deserving of everything he has now. Don't be jealous. You could have joined in with the business but it seems that you didn't. For whatever reason. 

What makes you think that you should have a share of the business now? And why do you want to know its worth? You won't be getting any of it.

Just love your family for who they are. They don't owe you anything - if they want to give you something, that's fine but you aren't owed anything here because you didn't put anything into it. If you did, then I apologise. 

tacpot12

It's not uncommon for family businesses to change hands in this way, particulary if the owner is a sole trader and not a Limited Company. (Sole traders can have employees.) I've even heard of owners giving away the business to co-workers who are not family members, because they have enjoyed working together for so long (they have become friends) and they want the business to continue in the hands of someone who has helped building it up. 

And a businesses is only "worth" what someone is prepared to pay for it, and this can be very little when it is clear that the owner is the brains of the operation. If the business owns land or property the value can be a lot more, but for many tradespeople their main assets are their tools, their van, and their good name. I think you could be  imagining the business is worth a lot more than it would be if your brother was not in charge.

I would suggest you have a gentle chat with your dad and mention that you didn't feel treated the same, and explore that with him. If you approach it with an open mind, you may find that there is a reason for it, and that your dad may accept that he hasn't been fair. Perhaps his Will is a way that he might seek to make this up to you, if he agrees with you. Clearly this has the potential to go badly, and may not be worth it unless you are very distressed by it. If there is a risk that you might feel worse after talking to him, I wouldn't do so. Focus on what you have, not what your brother has. 

I once read a quote that have often thought about and try to live by. "Happiness is not what we have, but knowing how lucky we are to have it." 

Pennywise

Owner run businesses with no staff are often worthless as any "worth" is the person themselves.  The actual "value" may be little more than the second hand value of the tools and van(s).  Over the years that your brother worked in the business, he was building up his own personal "worth" simply by working, getting to know the customers, building up goodwill etc.  If your brother wanted to sell the business today, if he had no staff, no premises, etc., it's highly unlikely he'd sell it for much more than the second hand value of its assets, unless, say, he had ongoing/long term contracts with the local authority, commercial contracts, etc.

motorguy

Pennywise said:

Owner run businesses with no staff are often worthless as any "worth" is the person themselves.  The actual "value" may be little more than the second hand value of the tools and van(s).  Over the years that your brother worked in the business, he was building up his own personal "worth" simply by working, getting to know the customers, building up goodwill etc.  If your brother wanted to sell the business today, if he had no staff, no premises, etc., it's highly unlikely he'd sell it for much more than the second hand value of its assets, unless, say, he had ongoing/long term contracts with the local authority, commercial contracts, etc.

+1

The brother is a tradesman and he is plying his trade.  Take him out of that and whats left other than some second hand tools and maybe a van.  Who would buy it as a going concern for more than that?  You'd need to be tradesman yourself in that field and if you were you'd simply start up / already have started up on your own.  Unless, as you say there are longterm contracts in place, theres no big material value to "the business".

Feels like sour grapes by the O/P and wanting something now for nothing, given they havent worked a day in the business but the father / brother did.

motorguy

Ratita_Presumida said:

The annual turn over I would imagine is roughly £100000.00 plus. The good reputation, discounts from builders merchants my father had used since the 80s, all this my brother received

I just want to know how much this business is worth. 

£100,000 plus turnover would translate to a much lower net profit, once materials and overheads are taken out.

Your brother worked as hard for that reputation as your father did, and it sounds like he has maintained it.  Had the partnership been disolved in 2012 it sounds like the brother would have continued as a sole trader anyway irrespective.

Discounts from builders merchants??  EVERYBODY in the trade gets discounts from builders merchants.  They wont have been giving your brother / father special extra discounts.  Certainly unlikely that your brother wouldnt have been able to get the same / similar discounts had the business been wound up and he went it alone.

I think you need to question your own motives here and what you hope to achieve?  there appears to have been nothing underhanded and tradesman type businesses - and many other businesses too - can and do get passed on down a generation with no money changing hands, especially one where its two tradesmen in a partnership, no long term contracts, just going from job to job.

HappyFriday05

I think this entirely depends on the legal structure of the business.

In a Sole Trader business (regardless of number of people) there is no legal distinction between the person and the business, they are one of the same.  You cannot therefore 'sell' the business as it is not a legal entity in its own right.

If it is a Private Limited Company (Ltd), then it can be sold. 

martindow

HappyFriday05 said:

I think this entirely depends on the legal structure of the business.

In a Sole Trader business (regardless of number of people) there is no legal distinction between the person and the business, they are one of the same.  You cannot therefore 'sell' the business as it is not a legal entity in its own right.

If it is a Private Limited Company (Ltd), then it can be sold. 

Even if a sole trader, a business could still be perceived as having a value with regular customers and good will attached to the name.  As has been said this may be often over-estimated as the value often resides with the qualities of the person or people running it.

I'm not sure that the value would change greatly, whether it is a sole trader or someone who has set up a limited company.

J_B

Doesn't look like the OP is coming back anyway - maybe they didn't like what they heard?

Thrugelmir

Ratita_Presumida said:

The annual turn over I would imagine is roughly £100000.00 plus. The good reputation, discounts from builders merchants my father had used since the 80s, all this my brother received

I'd say that your brother helped your father build the business up to what it became. Why didn't you join them if it was highly profitable work?