Business Sale Report Blog - News and views on buying and selling businesses

Couldn’t resist repeating the latest comments from Warren Buffett about the reasons people want to sell their businesses to him and his Berkshire Hathaway investment vehicle.

“Think of the business as a work of art. You can sell it to Berkshire, and we’ll put it in the Metropolitan Museum - it will have a wing all by itself; it will be there forever.” he said.

“Or, you can sell it to some… Continue reading

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No surprise to learn that in the first quarter of this year, there was a reduced appetite amongst boardroom directors for M&A deals. Partly due to the banks resistance to lend money to fund takeovers whilst in the midst of a ‘credit crunch’.

However, those funds (i.e. sovereign wealth) and businesses with… Continue reading

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For those big, powerful and wise enough, the latest trend in due diligence strategy is… don’t bother.

Last week Warren Buffett addressed MBA students at IMD, the Swiss business school. He was there to talk about a deal he struck two years ago where Berkshire Hathaway paid $4bn for 80% of Iscar, a metal tools manufacturer.

Mr Buffett admitted that he never bothered with… Continue reading

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When buying or selling a business, there is frequently a gap between the seller’s perception of the business’s potential worth and the price a purchaser is prepared to pay based on actual performance. One way of addressing this is to include an earn-out as part of the deal. In this situation, the purchaser will typically pay 60-80% of the asking price upfront, with the remaining 20-40% to be paid subject… Continue reading

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Buying a business is not like buying a car. Get it wrong with a business and it is likely to seriously hurt your wallet. So how can you tell if you are looking at one where the wheels might fall off? Nick Pritchard from Transaxman ltd has helped us put together a few examples of what to look out for and how to assess the true profitability… Continue reading

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First there was retirement relief, then there was business asset taper relief, and now there is entrepreneurs’ relief. No doubt the next government will try something else! The latest relief has been introduced following the uproar from small business owners who felt that the proposed 18% CGT was an unfair tax levied when they sold their businesses to fund their retirement.

The new relief, available from April 6 2008 will… Continue reading

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The other day I was talking to a business purchaser who told me he was just about to draft his Heads of Agreement for a purchase of a non-core business division, when his partner, who was having a chat to one of the target’s employees, unearthed a very nasty employment dispute between the owner and one of his sales managers.

At first they weren’t too concerned, after all the business was… Continue reading

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I got pitched a question last week from a principal of a software business.

He asked what were the most common valuation approaches used for valuing a small software company in a slow-growing market segment with revenues around £3m, growing 20% per annum. The company has ‘good’ technology though not ‘killer’.

We can come up with any number of valuation methods, but the only one that ultimately holds true for a… Continue reading

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There exists a glaring omission in the new Capital Gains Tax rules - they did not address earn-outs. Thousands of entrepreneurs who sold their businesses in 2005/06 have until 31st January to sort out a CGT tax nightmare for which HMRC issued no guidelines whatsoever.

This affected those people who are receiving part of their payment for their business in shares or loan notes as an earn-out (deferred payment). They had… Continue reading

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Well, what a surprise. Several hours after the chancellor announced the changes to the capital gains tax regime yesterday, a few very nasty details emerged.

The first startling discovery was that ‘entrepreneurs’ relief’ is in fact a misnomer. The 10% CGT rate turned out to be a lifetime allowance, an effective kick in the teeth for all serial entrepreneurs for whom a one-off £80,000 tax concession will not make a… Continue reading

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