Business commentator Paul Wallbank has published a blog post which will interest newsagents looking to sell their business. Paul looks at the challenge of selling a business, like a newsagency, to a purchaser from a younger generation. This is one of several factors which is challenging traditional multiples used in guiding the selling price of newsagency businesses.
Thanks Mark, if I had stayed as our village newsagent I would not have had any business equity to sell last year. It took my wife and I nearly 15 years to construct a business worth selling/purchasing by adding valuable categories and developing our premises. No quick fix to be had in a changing business environment.
What is frustrating Steve is that there are newsagents here who complain about falling values yet do not work on building the value of their business. A traditional newsagency will be valued as a traditional newsagency.
For those close to finding a buyer can I offer a word of warning about using a decent solicitor. We are in the middle of a very messy legal battle because we used a lawyer with zero experience in commercial sale transactions. Ours was a split settlement (which I would also advise against unless absolutely necessary and only with a watertight contract). We sold our newsagency in 2009 and are still fighting for a significant amount of money and paying interest on the loan! Make sure you use a lawyer who is experienced and comes recommended.
In our early fifties, retirement is not even on the radar. We need to re define the business and make it far more profitable to the extent that it will support a manager with only minimal day to day input from us. Then we will have a business that works on two levels, it should provide us a decent income and allow us to be semi retired and this should make it an attractive business for would be purchasers. We have a long way to go to achieve this but must work towards this end ….or we will not be retiring for a long time. Just as well we enjoy this type of business.
Former, we have friends who have sold two food outlets on a similar basis to you but they receive monthly payments and a default gives them the right to resume trading from the business themselves. I suppose the simplest way to understand what they have done is that they have leased the business with the final payment earning the incumbent ownership. Not risk free but it has made the business affordale and given them some sense of security as well.
Actually if it wasn’t for the financial challenges this’d be the greatest job in the world. Why would you want to sell.
Took me 18 months to sell after two sales fell through. To rub salt into the wound you have to factor in what cosmetic changes have to be made to the shop – repaint, shop refit etc…so glad to be out of it
Semi I am looking at taking on another newsagency. A good business purchased on good terms can be very rewarding.
Brendan, thanks for sharing info on the arrangement your friends made. We wanted a clean break so went for a more traditional arrangement at the time but I’d gratefully accept a ‘lease’ deal like that knowing what I know now. Basically we got $300k up front (March) and agreed to the final $200k by June 30 but our solicitor botched the ‘conditions’ so when July 1 rolled around they weren’t forced to pay us. Over the next 6 months they made all thr ight noises about paying us but began to run the business into the ground (the wife was a gambling addict as well which didn’t help) and declared bankrupcy the following June. The newsagency was closed. We are suing our solicitor through Lawcover for the outstanding amount. We have a very good case and it looks like we will get a large chunck back but not all … and we’ve had to wait three years! That’s why people need to get the right lawyer.
With one of my non newsagency retail businesses the purchaser claimed that the shop fit was damaged and refused to pay 33% of the agreed price. They had refused to inspect prior to hand over. It took a few months but they paid in full when I showed them the claim I would lodge with VCAT to force them to honour the agreement they had willingly signed.