A blog on issues affecting Australia's newsagents, media and small business generally.

Deleting your business data prior to selling your retail may not be a wise move

A former newsagent got into some legal hot water about the performance of the business as represented through the sales process.

It was when the purchaser discovered historic business data had been deleted that they became suspicious. That kicked off a legal process that was expensive for both sides and resulted in a financial payout to the purchaser.

When you sell a business you sell it with a set of assets necessary to the running of the business. Data are such assets, especially data relating to sales performance. How can someone buying your business expect to achieve results close to yours if they do not have the historic data to guide decisions?

I mention this today as my newsagency software company has a process around any request from a customer for help with deleting data. We ask for the request to be in writing, signed by the owner. We do this based on legal advice. We do not want is to be drawn into a legal battle between vendor and purchaser. We have been in the past, several times, when vendors found business performance that did not match representations made in the sales process.

In the legal fights I have seen at close range (as an expert witness)  it has been expensive for the business purchaser as well as the vendor. If data is deleted, the vendor can’t prove their position and this tends to not play well for them. I’ve reluctantly become involved as an expert witness relating to the management of the data.

My advice to anyone selling their business is don’t delete recent (within the last 7 years) historic business data on which you would, in the usual course of business, expect to rely for decision making.

If any asks me I say don’t delete business data. It is what it is. There is nothing to fear from the truth.

Now, on the matter of data. It is a core business asset, genuinely valuable. Collect it, cultivate it, treat it with care, analyse it. The most successful retail businesses I see do this. A retail business of any size can do it, and expect valuable results from it.

3 likes
buying a newsagency

Join the discussion

  1. Graeme Day

    It never fails to surprise me as to why so many newsagents and prospective buyers do NOT use the data a good system such as Tower provides.
    From this post I glean that the buyer didn’t ask for any print out such as the in depth version showing suppliers of Tower’s Monthly Comparison Report ot the Monthly Takings Report showing ex GST over 12 months for a 3 year period.
    These are things we do before listing. Plus we add performance graphs etc. Banks when they receive them think differently than if they have to request them.
    One of the biggest problems is that will newspaper Deliveries going South for whatever reason, the turnover drops considerably howevr the G.P in the main (especially on High Street) goes up for the pattern changes as you well know, from staples to chosen purchases with greater G.P.
    With these Reports we are able to do a Profitability spreadsheet demonstrating this shift thus demonstating the loss of sales is not the problem. Anyway anyone that buys a business frfom a Profit and Loss account without a due diligence of this kind is asking for the problem they do get.
    For your information Lotteries cancel out the day of change over all previous history therefore the only back reference is from the P.O.S. Systems. whch on a monthly basis doesn’t matter as much for cash flow purposes as product sales do as it is really depended on Jackpots.

    1 likes

Leave a Reply

Your email address will not be published. Required fields are marked *

Reload Image