[Andy Trish]

A competitor of mine has been losing a lot of money for the last 2 years and now wants to sell to me, and fast. he is in debt to the tune of around £350,000 but has a nice customer base who really don't have too much faith in him. he has contracts with them bringing in around £200,000 a year and he is still losing money and staff.

what would you do, wait till he goes bust and pick up the pieces or offer him something for his customer base telling him to liquidate the company?

If I take this on I know I can turn it around, I have faith in my business skills and so do my customers but is it worth it?

he originally wanted £880,000 now he wants £160,000 and I am thinking less.

[RayB]

Andy, you are in the driving seat and it depends how ruthless you want to be. The real experts at this game stay real close then pay £1 for the business the day it goes into administration.

But - it's more complicated if your competitor has staff - if you buy the order book (effectively closing the business) - then TUPE will apply - trust me I've been here

[stephendoyle]

hi andy,

ray's right - business is business but then friends are friends.

if it is a business relationship then you put your business first as
would they do the same to you?

i think you have to be a certain type to be ruthless.

i think the clue is in your post with "who really don't have too much faith in him"

could it be that they are looking elsewhere anyway and can you really turn
it round; is the list quality?

i would offer the absolute minimum possible; alternatively for your own
integrity offer say 50k and a further payment after working the list.

good luck Andy

regards
steve

[Fuzzy]

You must keep in mind that a business, just like any asset, is only really worth what a buyer is willing to pay for it, offer them a fiver , no, serious now...................

Whilst the price of a business is often based on the multiple of EBITDA (Earnings Before Interest, Tax, Depreciation and Amortization), which gives a truer reflection of the earnings of the company, resulting in a higher overall value. It is important to remember that the value of a business is not merely determined by mathematical calculations and number crunching.
Prospective buyers should make judgements about market position, quality of assets, growth potential and associated risks of the business.
Timing
The general state of the economy and the sector the business is in can have a significant impact on the price it will be able to command.
Growth
Buyers will pay more for businesses with a solid potential for future growth, as this not only makes the company a more attractive prospect but also helps them to recoup their initial investment more quickly.
Keeping the Books Clean
Good financial management is as important as operational management when it comes to selling a business. Areas such as a history of solid cash, debtor and creditor management will reflect well on the overall stewardship of the business – minimising the expectations of any ‘skeletons in the closet’.
Customer Base
The quality of the customer base is another important factor that will influence the value of the business. Customer bases made up of blue chip clients in growing industries generate higher value, particularly if there are opportunities for the buyer to sell additional services to them.
A potential buyer will also recognise the value of security in the client relationships. Turning long standing agreements with suppliers or customers into contractual ones will give potential buyers more confidence and could add significantly to the company’s value.
Is it Transferable?
An important question you should be asking yourself is whether or not the business is transferable. It is important that the business and its work ethic are transferable and compatible with the types of company that might be looking to buy.

Hope it helps

[Calibre Designs]

Andy, have you ran a due diligence on the company? Have you seen his order book?