Background Information
Maria operated a successful business for over 16 years and had been contemplating selling for a while. She had been thinking about and planning a sale for nearly 6 years.
“It was a big decision to sell. I had the business for 16 years and built a successful business from nothing. It felt like raising a child” - said Maria in her interview.
Maria found us from the NHBF as we are members. Maria said, “I wanted to find an agent that was reputable. I found you more suitable and felt you had a better understanding of my business and how to market it right”.
She saw a webinar for their members that had been produced by Zach and had also studied “the guide to selling a salon” authored by Zach. This is available free of charge from our website.
It was her first and, in her words, “only” business sale and Maria also said “I needed to understand every detail and the whole process. You were very clear and explained everything and I always felt at ease”
During the process, Zach advised Maria on how to maintain and add value to the business during COVID as these were exceptional circumstances. This was done by Maria completing a 13 minute Value Builder Questionnaire which was followed up with a 2 hour consultation with Zach and a 30 page report with recommendations. Maria also gave an interview of how she found this process.
Research has shown that over 75% of owners are disappointed one year after a sale so all Owners are encouraged to complete an online 7 minute Personal Readiness To Exit Questionnaire to ensure that each Owner is personally ready to exit the business.
After a protracted legal process, the business finally completed on the 16th December 2020, with the whole legal process taking place during Covid.
The Business
Urbanite Hair is located just off the High Street in Bedford town centre. The turnover was just under £180,000 with a profit in the region of £25,000. This high quality, top end leasehold salon has 9 staff, and the premises came very well presented
The Challenge
Urbanite Hair is a small salon and Maria ideally wanted to stay on after a sale and she wanted to hand the business to someone that would make it more successful. “I was happy I could sell to someone who understood the business and that I could work with”
Our Solution
The very first step in the process was to agree a market price. The eventual market price agreed upon by Zach was then comfortable for him to justify.
We then ensured we had all documents available before we went to market and had undertaken much of the due diligence on the business early on. In our experience, if you are not fully prepared then a sale can be delayed and any potential issues that may hinder a sale are dealt with in advance. Our business questionnaire is designed to extract important and comprehensive details of the Business including SWOT analysis to help formulate an effective marketing strategy designed to maximise price. A comprehensive Information Memorandum was prepared, so that when an interested party did come along, the whole process would happen very swiftly and there would not be any delays, even when the file was handed over to solicitors.
We also had to agree a marketing memorandum to place on websites and to send to competitors which maintained confidentiality but at the same time was able to attract Buyers. We involve the Client at each and every part of the process, putting them firmly in control and advising them each step of the way.
We were on the market within days of agreeing terms. We also placed a video of the business and photos.
We understood that this opportunity would probably attract a private investor or an acquisition by another competitor. The business was discretely exposed via the Internet using our website www.ets-corporate.com, www.businessesforsale.com and www.daltonsbusiness.com.
Our market research team approached appropriate chains and exposed the opportunity to various other salons within the industry, both local and national. We have access to market intelligence software which helps us identify the right financial profiles of potential acquirers.
Once a party had expressed an interest, they were sent a very comprehensive Non-disclosure agreement to sign which protected the businesses’ identity, client base and staff.
It is important to know the buyer as well as possible and ensure they are a good fit and would be acceptable by the landlord. In this case, the Buyer had a credible background and references as they already owned a salon in Milton Keynes.
A deal was agreed in August of 2020, and the Heads of Terms were drafted by Zach and the matter then proceeded to the solicitors.
The process was handled by Zach who had to liaise with the landlord, the buyer and their various advisors including accountants and solicitors. Even after heads of terms had been agreed there were issues to be resolved and Zach is on hand to deal with these.
Zach said: “a detailed head of terms is important as it then leaves less for lawyers to negotiate later including such key issues as:
What happens to staff
The landlord’s legal costs
Agreed completion date
Terms of the sales agreement
Non-competition clauses
We then had to work very carefully with the Seller to ensure her interests were looked after. In a sale involving a leasehold property, the Landlord and his Solicitor are also involved in the process, so this stage can be very complex and has to be carefully managed. Each stage of the negotiating and due diligence process was keenly negotiated by all parties.
Results
ETS Corporate were able to sell the business confidentially for the right price and deal for Maria. She was very happy with the outcome.
Book your free consultation with the author of this post Zach Dogar. Zach, has over 20 years experience as a business broker and has helped hundreds of business owners prepare and sell their businesses.