Sell up without stressing out
Businesses for sale: a good agent and solicitor can help everything go smoothly
Sunday 07 December 1997
Jose Worsey and her son took over the Raffles wine bar and bistro in Worksworth, north of Derby, last weekend. Buying the business was easy, but selling her previous one, a restaurant, was "horrific".
"We had a good solicitor, but the buyer's was awful," says Mrs Worsey. "He got the searches wrong, he got the licensing wrong, and he gave dreadful advice. Their licensing application was heard as their things were moved - if it had been refused they would have moved in without a licence. It was chaos."
Other things went wrong. Mrs Worsey engaged a London business transfer agent who specialised in selling companies to Hong Kong people coming to Britain. But the expected exodus never occurred, and after she had paid pounds 1,000 in advance, only two people came to view.
After a year, Mrs Worsey placed the sale with another agent, this time on a contract involving payment by result. But this incurred a higher fee - 3 per cent - and Mrs Worsey ended up paying pounds 8,500 on completion, compared with just pounds 1,600 for her legal fees.
She suggests vendors think carefully before choosing their business transfer agent. Some agents are fly-by-night operators who charge in advance but may not be around to deliver a service. Martin Fisher, of the Institute of Trading Standards Administrators, says potential customers should take common-sense measures to assess whether an agent is legitimate. A good starting point is to ask the agent for the name of someone whose sale the agent handled, and interview them.
"Seek testimonials," says Mr Fisher, "and find out what standing the agent has. Ask neighbouring businesses, who may tell you the bailiff called round the week before. The local chamber of commerce may know which agents are good. "
The National Federation of Self-Employed and Small Businesses suggests that any agent should be able to provide three recent happy customers in the area, and should have been trading for a reasonable period. The Federation advises clients never to pay fees in advance.
John Hunt, who bought Kenrich Frames in Coventry, says his main frustration was the slowness of the solicitors. "The process took too long. My advice would be to find a solicitor who is a business person first." His purchase was completed in 12 weeks, which Mr Hunt thinks excessive considering that he had finance in place.
James Rebbeck, spokesman for the Royal Institution of Chartered Surveyors, recommends using an agent that is a member of either RICS or of the Incorporated Society of Valuers and Auctioneers. "We maintain strict rules of conduct on conflicts of interest and members who look after clients' money, and require them to have professional indemnity insurance."
RICS's information centre (tel: 0171-222 7000) gives details of local members who act as business transfer agents.
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