Selling an Arb business

[Rhizomorph]

As we're at an early stage and I don't want to make location obvious at this point but we are remote and rural. An attractive but not particularly affluent part of the country. Its not an area you'd flock to to make your fortune - but people move this way for the general environment.

Sorry I can't be more precise at this point but I know several local contractors who use this forum.

[Rupe]

You might find that selling to one of those "local contracotors" is your best bet. They could take on you client base etc. Trouble is they will all think they can take on that extra work without paying you any money and if they are good then they probably will. Anyone you sell to will have to make their own mark so if they are not already established (like the "local contractors") then they have little chance. I would value your business at the value of its fixed assets nothing more.

 

And I dont mean to be harsh, if mine were for sale I would be in the same boat, these small businesses that we run do not stand on their own two feet, they require our input at 14+ hours a day and without us they are nothing. My client list is awsome but they would all go elsewhere (even just for comparitive quotes) if I sold up. And then the best new quote would win the job, regardless of how much someone had paid for the business.

[Graham]

I sold a tree business in '92 but I guess what happened then still holds true.

 

Basically there's no goodwill. You're the goodwill. It's not a branded product you're selling but your personal service. What's to stop you selling up and then contacting all your customers the next day with a new company name and phone no? I had to sign a legal document forgoing the right to start up again within a 25 mile radius for the next five years.

 

The new owner took on the old staff and existing contracts and clients and it was up to him to prove his worth.

[Rhizomorph]

Lots of food for thought there and I'm meeting some business agents soon to get their take on it. I had initially planned to just close down and sell the gear but anything extra would be useful.

 

Some thoughts on various comments below.

 

I have run the business as both contracting and consultancy over the last few years. The consultancy is more profitable but I struggle to offer a good service to both sides and I can't grow my own consultancy side with the time demands of the contracting. This is why I am looking to finish the contracting. Also finding the right person to manage it would not be easy.

Although the contracting makes a fair profit it is nowhere near what we were doing 3 years ago like most arb companies around here, however it still provides a steady income with clients more concerned about quality than price.

 

The partnership offer provides the extra security of merging my consultancy client base with a full time practice and having the benefits of working as a 2 man team rather than solo. - career progression, collaberation, different expertise, holiday cover! etc and not least increased profitability.

The risks of personal friction, less control etc are part of the trade off.

[Rupe]

Your client list will always be worth something to somebody, especially if its electronically stored, lilke on a spread sheet or something.

 

But I don't think the 2-3 times annual profit theory will hold for a goodwill based tree business.

[Yorkshireman]

the value is largely in the type of client really..

 

most private individuals are more susceptible to the vagaries of disposable income, corporate or larger budgeted organizations with statutory responsibilities are less likely to walk away

 

what might also bring you money, are your books prove of sales ,fixed & or depreciable assets, inc phone number the rest hinges on your client base I'm afraid.

 

do you know what percentage of turnover your profit is & do you pay your self a set realistic wage or do you live on drawings weekly / monthly> dependant on income of the business ?

 

rgds Iain