Business Sale Question(s)

[Stoneman]

Does anyone have experience selling your client list/book of business? I'm at ground zero and have no clue what to expect or even how to negotiate this. Plain, simple English please. I'm slow...

[loudbeard]

Do you have a buyer and need help on getting to FMV and terms or are you trying to package and market the sale?

[Stoneman]

Do you have a buyer and need help on getting to FMV and terms or are you trying to package and market the sale?

We have a couple parties interested in our customer list. I have no practical idea how to value that. The Googs says basically take the yearly gross from the combined list and multiply it by (insert number here) to reach the value of the customer list. <---- The general jist if I'm understanding.

Then of course, there's stuff like no compete, will not pursue, etc. THEN there's gotta be wording that we won't guarantee their income & shit like that. The way it seems to be working out, the customer list, equipment, and the building are going to end up being sold separately. For now I'm just focusing on the customer list. The equipment easy and we have a real estate agent working with us on the building.

[loudbeard]

Since you’re selling the equipment and building separately, you should calculate your EBIT rather than EBITDA. You should expect between 1.5x - 3.5x. Potential for additional money negotiated for your involvement in a transition.

[RandyO]

I went to several seminars for continuing education that included passing on a land surveying business, I have learned and forgotten. IMHO, business records/files ain't worth a lot. All they might gain you it first crack at new work. Like selling a snowplow route. No guarantees that customers/clients will continue with the business

fwiw, I was given records/files by my employer back in 1980 when he retired, I have/had survey records dating back to 1903. I gifted them to one of my employees when I retired, sold some of the equipment, theodolite/total station, and data collector (software more value than the collector itself)

Does the franchise go with the businness at all?

[Stoneman]

I went to several seminars for continuing education that included passing on a land surveying business, I have learned and forgotten. IMHO, business records/files ain't worth a lot. All they might gain you it first crack at new work. Like selling a snowplow route. No guarantees that customers/clients will continue with the business

fwiw, I was given records/files by my employer back in 1980 when he retired, I have/had survey records dating back to 1903. I gifted them to one of my employees when I retired, sold some of the equipment, theodolite/total station, and data collector (software more value than the collector itself)

Does the franchise go with the businness at all?

No. We're simply closing the doors. Long story short is my dad dragged his feet far too long pretending this isn't really happening. Hopefully selling the customer list, selling equipment that has any value, scrapping pretty much everything in the old pressroom (that hasn't been used in YEARS), literally emptying out the building, closing the doors, and selling the building. It's too much bullshit dealing with the franchise, never mind he'll be on his own in a couple weeks.

I've spend the last couple weeks breaking down printing presses. What once was a thriving pressroom is now a pile of three disassembled offset presses and a couple plate makers awaiting the scrappers.

[RandyO]

Rights to the franchise probably worth more than customer list, is that something you own, or renew a license

[dontpanic]

Make friends with a commercial underwriter at your local bank. (I just quit work, otherwise I'd have looked it up for you.)

There's a ton of data out there. I used to use Vertical IQ for industry information, and their reports often had info on recent business sales broken down by metric: Revenue, EBIT, EBITDA, net income, and others. It was tremendously useful, typically when an existing commercial client was looking to purchase a similar business in a new city - I could get instant validation of the asking price.

If you can't bribe a banker, try the SBA or one of NH's CDCs - community development companies, they're financing partners for the SBA.

[obsolete]

Make friends with a commercial underwriter at your local bank. (I just quit work, otherwise I'd have looked it up for you.)

There's a ton of data out there. I used to use Vertical IQ for industry information, and their reports often had info on recent business sales broken down by metric: Revenue, EBIT, EBITDA, net income, and others. It was tremendously useful, typically when an existing commercial client was looking to purchase a similar business in a new city - I could get instant validation of the asking price.

If you can't bribe a banker, try the SBA or one of NH's CDCs - community development companies, they're financing partners for the SBA.

Would a local CoC have access to that info as well? Or at least point him in a direction?

[dontpanic]

A Chamber of Commerce? I'd doubt it, I'm struggling to think of a reason why they'd want to pay the licensing fees.

Business brokers wouldn't bother - they're commissioned salespeople looking to get the best selling price they can.

Lenders and supporting financing organizations - they're the ones with the underlying risk management need.

Whoops, just saw the "point him in a direction" comment - yeah, they could potentially have some resources I don't know about, definitely worth a call.

[obsolete]

A Chamber of Commerce? I'd doubt it, I'm struggling to think of a reason why they'd want to pay the licensing fees.

Business brokers wouldn't bother - they're commissioned salespeople looking to get the best selling price they can.

Lenders and supporting financing organizations - they're the ones with the underlying risk management need.

Whoops, just saw the "point him in a direction" comment - yeah, they could potentially have some resources I don't know about, definitely worth a call.

Yeah, my thought was they'd maybe, at least, have a direction to aim him. That makes sense if there's a hefty license fee, which there always seems to be for good information.

[Stoneman]

Thanks all. We're currently negotiating our small customer list.