A retailer in one of our more leafy shires wondered if there was a multiplier he could use to work out the worth of his business. At some point in time most of you will either buy or sell a business or both, so I thought this was a subject worth airing.

There was a multiplier in my files but it is only for a newsagent’s business. It says: “It is generally fair to set a selling price for a newspaper business based on 12 weeks’ profit.”

Obviously one way to find out what the fair price for the whole business is would be to go to a business transfer agent, but even then some of them will overprice it.

Then there is the tricky factor of goodwill – it being the element that ensures there is a business there to be continued. Factors that influence goodwill include location, no need for big material changes, demand and trading hours.

Certain elements that contribute to the value of a c-store include an off licence, a post office, the lottery and news rounds as does a monopoly position (most of these factors are obviously open to change as the seller cannot guarantee that the new buyer will be allowed to retain all the licences/agencies/services currently offered by the present owner).

Buying/selling privately can be very attractive when you consider the savings and the wily old ways that some estate agents have of tying you up for life and throwing away the key. However, if you go private you could wind up with unreliable accounts, arguments about fixtures and fittings and unreasonable staff conditions.

You should at least always have a surveyor, plus a reputable accountant who will understand profit and loss accounts and a business valuer as quite often the major parts of the sale price are goodwill, fixtures and fittings, neither of which is covered by any building survey.

And you need to check out the location. A solicitor won’t check into changes that the planning office may have in the pipeline, either negative or positive.

If you use a professional please use one that trades under the relevant standards such as the National Association of Estate Agents, Incorporated Society of Valuers and Auctioneers or the Royal Institution of Chartered Surveyors.

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