Sell My Retail Business

Our advisors recognise the value of retail trends and buyer behaviour

How to sell a retail business

Selling a business is a time-consuming and often complex process. You need to advertise effectively, negotiate with potential buyers, and make sure the information you provide is reliable, all while running your business day-to-day.

It is advisable to hire a business broker to help you with the sale. They will talk to interested parties on your behalf, advise on any problems you are likely to encounter, generally freeing you up to carry on driving the business forward.

The key aspect to hiring a broker, however, is to make sure they have previous practical experience in your industry.

Retail industry and the economic crash

Retail suffered greatly throughout the economic crisis, as consumers drastically cut back on spending. Jobs were lost, both large chains and small independent retailers went out of business – the industry had to change from within.  

Partly as a result of advances in technology, the last decade or so has seen a huge growth in online shopping and social media marketing, providing a global reach that allows small retailers to compete with larger counterparts.

As a result, if you are a high street shop owner selling your business, there may be a number of facets that contribute to your overall turnover, instead of the traditional income stream from a single ‘bricks and mortar’ shop.

 

---

• Previous sales and acquisitions experience
• Sector specialisms and average success rate
• Sales value expectations and growth potential

Free Guide Download

10 Key Questions to Consider Before Appointing an Advisor

Our Essential Checklist to Selling your Business

How do you present your information to potential buyers?

The first document you will need to produce is the Sales Memorandum, also known as an Information Memorandum. Contained in this document should be a general outline of your business, including why it was started, how it works on a day-to-day basis, where you make your profits, and the reasons for selling.

Buyers will also need to see general financial information, although there is a confidentiality aspect here. More specific financial details can be provided once you have narrowed down potential buyers to those with a definite interest.

As far as financial information is concerned, buyers will expect to see:

• Complete set of accounts
• Copy of lease (where applicable)
• Inventory of fixtures, fittings, plant & equipment
• Staff contracts
• Copy of recent VAT returns for VAT registered businesses
• Details of equipment on Hire Purchase or leasing agreements (where applicable)

Value my retail business

If you’re considering putting your retail business on the market, the first step is to carry out a business valuation to calculate the value of your business and determine a starting point for your sale price. We offer a retail business valuation delivered by our in-house, valuation team and serve a wide range of businesses, from florists, online retailers to post offices. The Selling My Business team offer a fast turnaround service, saving you the hassle of turning to an external valuation service provider.

How much is my retail business worth?

Valuing a retail business is vital as it will form the stepping stones to selling your business. Entering into negotiations with prospective buyers with an open mind and armed with the knowledge of your business worth can help ensure that you maximise market value. The Selling My Business team will talk you through how to value a retail business, ensuring that you’re well informed at each stage of the process, from business valuation to sourcing a buyer from our vast database of over 10,000 interested buyers.

Professional advisors

Your accountant will be able to help you prepare the necessary financial documentation to be included, and you may also want to seek professional guidance from tax and legal experts.

When you receive payment for the business you need to invest the money in the most tax-efficient way, and your tax advisor will be able to guide you on the best way forward in this respect.

 Professional legal advice will definitely be needed should your buyer demand warranties or indemnities in relation to the business.

What issues are retail business owners facing that could impact on a sale?

• Cyber security

Website security is an ongoing issue for any online retailer - protecting customer information and providing a secure payment system is paramount to a successful venture.

With so many new threats to our online security it is very difficult for businesses to recover from a cyber attack, and very easy to lose consumer loyalty and trust as a result.

• Business rates

Depending on your location, you may have experienced a huge increase in business rate liability since the latest revaluation of commercial properties in the UK. Although the government has promised to look into, and potentially overhaul, the current system, some retailers continue to struggle with cash flow due to these increases.

• Funding

It can be difficult for retailers to obtain the right type of business funding, but this is crucial in dealing with issues such as business rates increases. Alternative lenders offering merchant cash advances are becoming more common - these are based on future cash sales, but traditional bank lending can be hard to obtain.

Negotiations with buyers and the Heads of Term Agreement

Once you have shortlisted potential buyers, you will probably find that one or two seem to be a ‘good fit.’ At this point you need to begin more in-depth negotiations, and go through the buyer’s due diligence process.

This involves further scrutiny of your business finances, as the buyer checks the information you have provided is accurate and can be relied upon. They may make further demands in terms of warranties and indemnities, which could ultimately put you at risk of legal action, so you should seek professional advice before agreeing to these.

The Heads of Term Agreement lays out the results of your negotiations - parts of this document may be legally binding, but there is scope for further negotiation before the final sales and purchase agreement is drawn up.