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  • Sale or Purchase of Signmaking Business.

  • James Bateman

    Member
    January 11, 2021 at 8:10 am

    Hi all!

    Hope everyone is ticking along as best they can. Feels like a strange parallel reality at the minute… but I digress!

    I wondered if anyone had experience in either buying or selling a small business?

    Lets say a rival signmakers came up for sale in your local area, would you see it as an opportunity to buy out the market share and expand your business or would you wait/avoid engaging given the uncertainty?

    For the purposes of this question; it would have a strong customer base containing most local council/government organisations, plenty of long-standing clients with a pre-COVID turnover of 20-30K per month (with some months during COVID being between 12-26K).

    If you were on the fence or unsure, what kind of things would it depend on?

    • This discussion was modified 1 week, 3 days ago by  James Bateman. Reason: Added COVID period turnover
  • Colin Crabb

    Member
    January 11, 2021 at 9:53 am

    Will you be taking on the staff?

    Are the owners retiring / leave the trade completely?

  • James Bateman

    Member
    January 11, 2021 at 9:58 am

    The owners will be leaving and due to a previous downturn, two members of staff were made redundant.

  • Robert Lambie

    Administrator
    January 11, 2021 at 10:45 am

    Personally, I wouldn’t buy anything at the moment. Especially with something like this!

    If you are looking to buy the company, you should purchase based on 3-5 times their EBIT, not their turnover. In short, You want to know what their annual “clear profit” after every single cost is deducted, but before taxes.
    You will also want to go back 3-5 years of accounts to see the profit pattern over time.
    i.e. is it on a constant decline, rising or fluctuates? then base your offer accordingly.

    Obviously, I am generalising here, there are lots to take into account but this is a good starting point to know if its worth going any further.

    I would sit-tight and watch it close. you may find that they may not be around by the end of the year, along with others. I think 2020 was just a warm-up for what’s coming. survival of the fittest!

  • David Hammond

    Member
    January 11, 2021 at 11:14 am

    Most small businesses are not businesses, but jobs, with owners earning a poultry wage. (perhaps not the case in your situation)

    It depends on what their work consists off, if they’re churning out 1000’s correx signs at £5 each, is that really the work you want to be doing. What are the customers like, will they pay ‘your’ prices, or just go the next cheapest?

    If they’re closing, then their customers will need to find somewhere else, so you could benefit without spending a penny?

    Personally, we’re sitting tight, and riding out and start rebuilding when there’s a little more certainty in the world.

  • Chris Wilson

    Member
    January 11, 2021 at 7:22 pm

    Was a flat out no from me.

    But the council/government contracts raised my eyebrows. But I’d want to see every invoice for that.

    There’s one for sale in my area. Incredible price that made my jaw hit the deck, but if they sell it for anything close to that then hats off to them and fair play. And am viewing it as it will go one of 3 ways.

    1) it will never sell or not quick enough for them and they will shut up shop and sell the assets.

    2) someone will buy it for silly money, start loosing money and fold

    3) someone with some sense will haggle it down and buy it for much less and give us a hard time and run for our money day in day out. This is my least preferred option but got to be real about it.

    But I also know that one of the printers has dampener issues or something and drops nozzles not long after a clean, that there CNC machine is dreadful and that fair few signs have come off the wall that they have fitted.

    Would I buy one 60/100 miles down the road from me… at a good price maybe. But I don’t think I would locally.

  • Colin Crabb

    Member
    January 11, 2021 at 9:52 pm

    So why I asked about owners and staff:

    they’re not retiring or leaving the trade, so nothing stopping them from opening a new company again at a later date, or a member of staff from ‘having a go’ and opening… attracting the old contacts.

    Buying ‘Good Will’ isn’t worth very much at the moment.

    • This reply was modified 1 week, 3 days ago by  Colin Crabb.
  • Steff Davison

    Member
    January 17, 2021 at 11:10 am

    Now is a great time to expand, provided you have done your due diligence, my way of looking at things is be brave when people are fearful, and be fearful when everyone else is being brave (reckless).

    If you can buy at your price, rather than theirs then look into it further. Waiting till it closes is fine if you just want the machines ( but from what you have said I think you want their customers) Good luck

    Oh and an additional £200-£300K per annum isnt to be sneezed at either( even if that only nets down to an additional £20-£30k a year.

    • This reply was modified 4 days, 15 hours ago by  Steff Davison.

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