Georgina Dawson was the Owner of a very successful London based brand brand Foxcroft and Ginger. It had been represented in many London Venues and had become internationally recognised since its inception in 2010.
In April of 2018, she decided to open a venue on Balham and chose a prime site and started trading. She also operated a successful bakery operation, which she used to supply the business. In December 2018, she decided to sell the Café. She did not have the time to devote to both activities.
She then approached various agents and Business Brokers as she knew it would be difficult for her to recoup her investment. Initially, Georgina was very uneasy about using a broker to sell her business.
"Yes I was sceptical as I was going into the unknown"
"I did speak to other agents, but it was you. You were the most friendly and amiable person" remarked Georgina of Zach Dogar of ETS Corporate.
She wanted a broker that could effectively sell her business and help her throughout the process as she was very inexperienced at selling the business. Also, the fee structure was good as it was no sale no fee, and there was plenty of incentive to sell. Georgina felt the valuation was realistic, and the marketing strategy allied with Zach's experience made her chose ETS Corporate.
Zach said of business valuations: "you must price the business realistically. Although it may be sensible to start at a slightly higher price to capture a keen Buyer, there should be an understanding of a realistic market price. Up to 90% of businesses on the market are well overpriced and therefore, do not sell. Many clients report that they received much higher valuations. It's not the marketed price that's important but the sale price. It's key to have a strong understanding of what's happening in the market."
"I found the service good exactly as I imagined," said Georgina.
"I still feel like not sure of the ins and out. Left it to you to deal with."
She first instructed ETS Corporate on the 29th December 2018 and the sale completed on the 13th June 2019. Georgina used a recommended solicitor who has worked with Zach for almost 20 years on many deals, and she was able to complete the sale very swiftly.
The acquirers, Brunch Bros LLP, are looking to grow their brand throughout London.
The high-quality café is between Balham and Tooting Bec stations. It is on a long residential road with a selection of small businesses including a hair salon, gardening shop, antique shop, pizza restaurant, bakery and an estate agent. There is free for 1-hour parking outside the premises and pay and display parking locally.
Balham itself is a bustling area with affluent young couples, families, and students alike. There are many schools nearby in this up and coming area of London. There is also a highly publicised summer street fair which takes place on the street.
This very new café business was on the market due to re-location and other business interests. The brand name has existed since January 2010, and has been exposed via various sites throughout London, namely:
Soho in Jan 2010-2016.
Pop up in Box Park Shoreditch from Oct 2011 - 12th September
Pop up in Google Campus Shoreditch from 14th January - 14th March
Opened Whitechapel Branch in May 2014 - Oct 2017. The fixed-term contract finished, and the landlord was looking to refurbish. On this site, the business won the "Best Independent Café" award from Cafelife Awards in 2015 and the "Best Independent Sandwich Shop & Cafe of the year" from The Sammies in 2015.
Pop up in Old Street tube station for March 2015 - June 2015
Pop up in Dalston (Beyond Retro clothing store) June 2015 - June 2016
The present premises opened in Balham in April 2018 and has been a thriving business producing excellent profits.
The business itself is a high-class café and offers a quality brunch and lunch service. The link for the website and the full menu is https://www.foxcroftandginger.co.uk/menus.
The Buyer has discounts for bakery products. There is also an alcohol license in place.
The brand has had an excellent global following from around the UK, and the World, which gives Foxcroft and Ginger an added benefit if a purchaser was looking to start a chain and expand. They have had articles in Time Magazine, Elle Magazine, The Times (UK), New York Times, London Evening Standard, Heat Magazine, Good Housekeeping, Korean Marie Claire, French Cosmo, GQ (Italia) and featured on New Delhi Television and many more publications and interviews. There is a brand video.
The business is fully staff operated and employs six staff, including a head chef and two supervisors. The system used is Izettle Pro, and the accounts system used is Kashflow accounting. It is a real turnkey operation.
The business has a strong social media following including 2075 Facebook followers and 2130 likes, 3,835 Twitter followers, and 1055 Instagram followers.
The business will enjoy organic growth as it becomes established in the area and also by joining Deliveroo. The shop could open later and offer dinners.
The turnover for the business for the full fiscal year will be £170,000 with a profit estimated to be £20,000.
There are six years left of a 7-year lease, and the rent is currently £18,000 pa. It is due to increase to £20,000 for the last two years of the lease, and the deposit is two months' rent.
Market Price: £69,000 plus assets
Georgina wanted a swift sale and to recoup as much of her initial investment as possible. She wanted to continue to supply the café with her bakery products. Moreover, She wanted to ensure that the business sold to someone that would extend the success of the brand she had so carefully nurtured.
The very first step in the process was to agree on a market price. The original asking price was maximised and was adjusted once we had market feedback.
We ensured we had all documents available before we went to the market and had undertaken much of the due diligence on the business early on. Being fully prepared will counter any potential issues that may hinder a sale. Our business questionnaire extracts important and comprehensive details of the company, including a SWOT analysis to help formulate an effective marketing strategy designed to maximise price. A data room ensured that when an interested party did come along, all necessary documents were available.
A marketing memorandum appeared on premium websites. We involve the Client at each stage of the process, putting them firmly in control and advising them each step of the way.
The business was discretely exposed via the Internet using our website www.ets-corporate.com, www.businessesforsale.com and www.daltonsbusiness.com. The marketing efforts produced over 40 interested parties.
A video was also shot of the premises and placed on youtube to help promote the business sale.
Once a party had expressed an interest, they were sent a very Non-disclosure agreement to sign which protected the information provided.
Abraham Christi of Brunch Bros LLP showed a keen interest in the business and negotiations started with him. Once an agreement concluded, Abraham was asked to pay a lockout payment of £5,000 to secure the transaction and allow the matter to proceed.
"A lockout payment from the Buyer is significant," says Zach." It acts as a non-refundable deposit and is an excellent financial cushion as the Seller will have to pay legal fees as soon as the sales process is underway. It states the Buyers intentions and compensates for missed opportunities.
Zach drafted the Heads of Terms, and the matter then proceeded to the solicitors.
We had to work very carefully with the Seller to safeguard her interests. In a sale involving a leasehold property, the Landlord and his Solicitor are also involved in the process, so this stage can be very complicated.
ETS Corporate was able to sell the business within six months of being instructed.
Georgina was very relieved that the process was quick and easy, and she trusted in the ability of Zach. The company sold for the full asking price.
When asked Would you recommend us to anyone wanting to sell their business? "Yes I would" she replied.
Zach Dogar has over 20 years' experience as a business broker and has helped hundreds of business owners sell their business.
Book your free consultation today to help formulate your exit strategy.