1. What preparation can an owner or board of directors undertake before selling the business?

A lot of firms dealing in business disposals often talk about ‘grooming’ the business in readiness for its sale. In reality any such ‘grooming’ will become visible to a purchaser who may find it necessary to readjust e.g. for any over zealous headcount reductions which are designed to inflate profits.

What is important is that the business is presented both historically and looking forwards in a way that substantiates the improving trends of the business, the repeatability of revenue streams and any contracted income. Sensible house keeping such as ensuring that all supplier relationships are robust where critical and client contracts are signed is important as is keeping debtors under proper control.

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2. Why do some business broking firms ask for over £30,000 in initial fees and also a further success fee on selling the business?

There is absolutely no reason for any business to pay fees at this inflated level.

All competent advisors and brokers will undertake the necessary research and marketing exercise without requesting such a large fee.

If the broker is confident that they will sell your business then the initial fee should be much more competitive.

Such firms also place your business on advertising sites open to the general public which calls into question the research model.

3. What underlying tax rate should I expect?

Currently the tax rate applicable for Capital Gains on business sales is 10% for each individual and up to £5m under ‘entrepreneurs’ relief.

4. What happens to the cash in my business?

Most transactions are carried out on a Debt Free and Cash Free basis. This effectively means that the vendor has to cover his creditors (tax, suppliers, bonus’s etc) up to the date of the sale from the consideration monies. If there is cash in the business by virtue of debtors and cash in the bank then any positive balance is paid to the vendor. Hyde House can help assist in ensuring the most tax effective treatment of such cash.

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5. What are the key factors that influence the valuation of my business?

There are a number of key points outside of general factors that can effect valuation. For example the economy (recession) or political environment can have an impact generally on valuations.

Specific value drivers include but are not limited to:

• Market sector
• Intellectual Property within the business
• Specialism of process or processes –(can any firm do it? Or do you need specific skills and licences?)
• Contracted client base
• Repeatable contracted revenues

6. Who handles the negotiations and ensuring the right deal for the business?

Hyde House handles all of the negotiations from initial meetings to the signing of completed contracts. Its our job as the professional advisor to take you through the pro ess stage by stage but ensuring that you are still focusing on running your business.

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7. Why Hyde House?

Hyde House are professional advisers with a successful track record. When dealing with Hyde House you are assured of the services of a Partner who will build strong relations with your business in order to ensure that the right buyer are found at the maximum value. Hyde House competes on expertise, service and fees.

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