buying a company

[wheresmyterminal]

Hi I haven't been on here for a while but I just wanted to get others opinion on this: I've been given the opportunity to buy a company (electrical contractor) How would you go about placing a value on a company?

 

[kerching]

From bitter personal experience I would be more concerned about whether the company has any staff, whether TUPE transfer regulations exist.

What's the confirmed order book like, any debts? are you just buying the customer list? ongoing guarantees, warranties, debtors. You need to see [or your accountant does] the last few years trading figuresbefore you could even begin to guess a figure

I would say that there are far more questions than can ever be answered on a forum

 

[NozSpark]

Well the fixed assets would be easy, however the more difficult bits would be the client list (what if all their clients went bust?), contracts on the books and then you'd have their reputation,, but what if they're over staffed?

But TBH anything is only worth what someone is willing to pay for it. If no one bought it then tey'd have to sell their assets off and then their clients would just have to find another contractor

 

[Manator]

Exactly the same as you would for any other commercial enterprise. If you have to ask, then you are really not ready to buy an existing company.

Another problem with electrical contractors is the fact that order books are often short lived, and even with contractual orders change of ownership offers a get out clause to potential clients should anything more interesting come along.

It takes on average 5 years to build up a basic client base, and ten years to appreciate continued referrals, so if the company can offer this and the next two to five years are secured then it may be a viable purchase.

 

[steptoe]

as above,

are you buying a going concern or a name?

I think this is the last place Id be asking such a question,

why do you want to buy a company anyway?

your solicitors and accountants can answer your questions much better than us.

TBH, the more I think about it, if you are asking on an internet forum about buying a company of any sorts then I think you need to be asking about which hospital has the nicest gardens.

 

[Evans Electric]

IMHO You'd be raving mad in the present financial climate .

You can buy Evans Electric if you like ...I've had enough .

Customer base ...all gone bust.

Stock ....2 drums of T&E and some conduit boxes.

Work in progress ..... ?

Plant ......... an aged Escort van , a conduit vice/ bender and cable crimper up to 95mm .

Office equipment ....... some letterheads , Regs book and an OSG .

Staff ............ 1 secretary see photo.

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The company ....

 

[kerching]

does the secretary come with any guarantee or can you 'try before buy'............ :coat

 

[steptoe]

I think Deke may already have 'damaged' her.

 

[apprentice87]

Hi There,

A well establised business man told me many years ago that "At one time when you bought a business you would buy the "good will" too. Now that has all gone, a business is worth whatever its assets are and nothing more"

You buy an existing firm, how you going to stop the owners starting in a new name and taking all the punters back??

Oh yes, same business man also told me "Nobody EVER sells a business that is making money, no ifs, or buts, they would get a manager if they were retiring"

john..

 

[soulman]

Apprentice87, I disagree, Of course the goodwill & assets are worth money. I have sold my business which was profitable for a hefty sum and the majority came from the goodwill. (nothing electrical). I'd just had enough of working every night of the week. I would never consider buying a electrical contracting business. Start up on your own and invest your money into advertising. Advertising is the key, until you have a well established business. I know lots of electricians, plumbers and builders who cry i have no work. Where do you advertise? i dont!

Also one point apprentice87 made is good one, as i have seen this happen "You buy an existing firm, how you going to stop the owners starting in a new name and taking all the punters back??

 

[Doc Hudson]

Hi I haven't been on here for a while but I just wanted to get others opinion on this: I've been given the opportunity to buy a company (electrical contractor) How would you go about placing a value on a company?

Welcome to the forum. Any service industry where customers are bound by an agreed contract duration, (and early departure cancellation fees), can sell its customer base as all the legal contracts can be transfered to the new owner. This has happened numerous times within the communications and gas and electrical industries. Mergers and takeovers adopt the customer base. Once their contracts have expired the customer can go wherever they like. In a retail or wholesale business generally customers are just a free party able to move and change wherever they please so the main assets will be stock and buildings etc. Within the construction industry there may be some long term project contracts which could be taken over with a company purchase. But generally many small to medium sized businesses do not have large long term contracts running or many stock assets or many buildings. I have to be honest that I am bemused as to why anyone considering purchasing any business would not already know how to value that purchase?

Doc H.

 

[wheresmyterminal]

Cheers. Lots of constructive feed back there. The guy is shutting the company down. There are no on going contracts no assets or staff. There is some regular customers. So I don't know quite what he's wanting to sell!

 

[Manator]

Steer clear, to buy an electrical company you are in effect buying won contracts, and they would need to run to at least the length of the loan repayment time scale.

 

[steptoe]

so you are buying a name in effect then?

and reputations are only as good as the last job,

in all honesty,

are you an electrician or a developer?

 

[batty]

I am very interested in this maybe one day when I retire I may want to sell my company, never even thought about it. So how much is he looking for is it hundreds or thousands?

 

[Evans Electric]

I don't think I know of this ever happening TBH . Not with electrical contractors , big or small .

Lot of instances of guys leaving ,starting up and pirating customers .

 

[paul b b]

I dont understand what he's selling you...just the name and the tools i guess. as said before, put the money into adverts!

 

[steptoe]

some people just dont have the ability to get, keep, or interest customers,

look at all the numpties buying into franchises...........

 

[Doc Hudson]

Cheers. Lots of constructive feed back there. The guy is shutting the company down. There are no on going contracts no assets or staff. There is some regular customers. So I don't know quite what he's wanting to sell!

I assume this is a limited company then, otherwise there is no actual thing to purchase. Is this just a cost saving exercise on his side to save him the time and hassle of winding the company, closing and finalising as his accounts at companies house? If you are looking for a Ltd company you can set one up yourself for a nominal fee, most likely cheaper than purchasing someone else's, especially if the one for sale has no assets, contracts or staff. I would seek professional financial help from your accountant if you were seriously going to take this further.

Doc H.

 

[m4tty]

para la compra de una empresa se puede tomar en cuenta el valor de lo que produce en cierto tiempo y la rentabilidad que se obtiene

for the purchase of a company may take into account the value of what it produces at a certain time and cost that is obtained