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Zal

Zal

209 posts

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#288291 18-Jun-2021 16:02
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Hi all

 

I've been running a break fix stop for the past 7 years to businesses only.

 

 

 

I want out and keen to move on

 

 

 

Questions I have:

 

How to value the business? (Clients only)

 

How to exit well?

 

Any general advice on doing this well for all involved.

 

 

 

I'm in CHCH.


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BlinkyBill
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  #2730789 18-Jun-2021 17:06
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You should engage a broker I reckon. They can value the business and advise how to sell out, and probably they will have access to the market already.

 

Obviously they’ll charge a fee. Interview a couple of brokers and follow up on references they should be able to provide.

 

I don’t know what ‘clients only’ means.




Lias
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  #2730848 18-Jun-2021 20:30
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BlinkyBill:

 

I don’t know what ‘clients only’ means.

 

 

My assumption is he means that all he wants to sell is the database of clients as opposed to any other assets.





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tchart
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  #2730903 19-Jun-2021 08:17
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I'd talk to geeks on wheels etc. I'm sure they would be interested in taking over the clients.



BlinkyBill
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  #2730905 19-Jun-2021 08:32
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Lias:

 

BlinkyBill:

 

I don’t know what ‘clients only’ means.

 

 

My assumption is he means that all he wants to sell is the database of clients as opposed to any other assets.

 

 

A list isn’t a business. A business means there is an income stream from contracts/agreements, and/or a P&L with a future, goodwill that can be measured, intellectual property - all that sort of stuff.

 

A list has some value I guess, but not much relative to a business.


Zal

Zal

209 posts

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  #2731083 19-Jun-2021 14:22
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tchart: I'd talk to geeks on wheels etc. I'm sure they would be interested in taking over the clients.

 

 

 

Yes correct. Clients and everything related to them, contacts, documentation cloud services etc.

 

 

 

The rest is a car and tools, and I needs those for other interests that isn't I.T

 

 

 

 


Delphinus
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  #2731348 20-Jun-2021 10:06
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I did exactly this a few years ago. Spoke to a broker but they weren't very useful.

 

I ended up contacting a number of IT firms around town I had a relationship with, and offered to sell the business goodwill to them. In the end I made sure to sell to a good firm that I knew would look after my clients. This paid dividends in the long run with other ventures I started.

 

They wanted phone number, support email and website redirected to them. Also went round and introduced their sales manager to my top 20 clients, as part of handover.

 

Valuation is hard, it's just somewhere between what you want for it and what they are prepared to pay. PM if you want details from my example.


snnet
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  #2731360 20-Jun-2021 10:47
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Selling a customerbase can be tricky because in general there isn't a guarantee they will stick with whoever you have sold to but I guess there's going to be a level of acceptable loss taken into account


 
 
 

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BlinkyBill
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  #2731379 20-Jun-2021 11:48
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Delphinus:

 

 

Valuation is hard, it's just somewhere between what you want for it and what they are prepared to pay. …

 

 

That’s not valuation, that’s a sales negotiation. Valuation is a forensic accounting process and then a market assessment, which is subjective of course.

 

You won’t get the best possible sale price without a proper valuation.


bipolarLight
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  #2731431 20-Jun-2021 12:36
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If your business isn't consuming your 9-5pm then consider teaming up with another contractor to keep it running.

 

Not that you're paying the cotnractor but more like free lance. This worked for me.

 

 


Zal

Zal

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  #2731453 20-Jun-2021 13:47
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bipolarLight:

 

If your business isn't consuming your 9-5pm then consider teaming up with another contractor to keep it running.

 

Not that you're paying the cotnractor but more like free lance. This worked for me.

 

 

 

 

 

 

Interesting, how would one find a free lancer?

 

 

 

Half of my issue is I'm fast getting out of date and losing interest. It earns ok money but not really worth the risk.

 

 

 

 


Dynamic
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  #2732001 21-Jun-2021 11:55
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Traditionally the valuation of a business for a sale has been about the potential financial return to a non-working owner.  If you stepped back, paid someone to do your job, would there be any profit left for a non-working owner (investor)?  If yes, how sticky are your clients, how good are your processes etc so somone else can step into your shoes and make the same or similar money to make their investment pay off.  If no, you don't own a business; you own a job.  Not many people would be willing to 'buy a job' and those that are would need to see the potential to expand into profitability beyond paying their own wage.

 

If your phone number and email address would go to the new owner and you would introduce them to your top 20 or at last your top 10 (or more) clients face to face then you stand a good chance of being able to sell your client list for a modest sum.  For some 'business sales', working for the new company for a few months to help your clients 'stick' to the new company is considered beneficial (if the new owner wants this), though I expect this is less common with micro-business sales.

 

Source: An associate of mine sold their one man break-fix business several years ago, though I never asked the amount involved.  Several years before that I purchased a one-man break/fix business to start myself off, paying about 25% of the expected first year's labour turnover.  I insisted on a clause to pay half up front and half over the next 90 days based on turnover.  This ended up being to my benefit as the client list was misrepresented.  It turns out one of the key reasons he was selling was his biggest client was bailing out.  I met all of the others, but kept getting excuses about these guys, and was just assured 'they will call'.





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Zal

Zal

209 posts

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  #2732598 22-Jun-2021 12:00
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Dynamic:

 

Traditionally the valuation of a business for a sale has been about the potential financial return to a non-working owner.  If you stepped back, paid someone to do your job, would there be any profit left for a non-working owner (investor)?  If yes, how sticky are your clients, how good are your processes etc so somone else can step into your shoes and make the same or similar money to make their investment pay off.  If no, you don't own a business; you own a job.  Not many people would be willing to 'buy a job' and those that are would need to see the potential to expand into profitability beyond paying their own wage.

 

If your phone number and email address would go to the new owner and you would introduce them to your top 20 or at last your top 10 (or more) clients face to face then you stand a good chance of being able to sell your client list for a modest sum.  For some 'business sales', working for the new company for a few months to help your clients 'stick' to the new company is considered beneficial (if the new owner wants this), though I expect this is less common with micro-business sales.

 

Source: An associate of mine sold their one man break-fix business several years ago, though I never asked the amount involved.  Several years before that I purchased a one-man break/fix business to start myself off, paying about 25% of the expected first year's labour turnover.  I insisted on a clause to pay half up front and half over the next 90 days based on turnover.  This ended up being to my benefit as the client list was misrepresented.  It turns out one of the key reasons he was selling was his biggest client was bailing out.  I met all of the others, but kept getting excuses about these guys, and was just assured 'they will call'.

 

 

 

 

This is gold, thanks so much!


ANglEAUT
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  #2732663 22-Jun-2021 13:46
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Zal: Interesting, how would one find a free lancer? ...

 

Let me be one of many that tell you "to network".

 

     

  1. You are bound to find like minded people on site like GZ that might be interested (like me, but AKL based)
  2. Who is in your LinkedIn network?
  3. Visit the local business association & find the local IT guys there?
  4. As above, is there a small to mid-sized company in your area trying to expand?
  5. Do your family, friends & acquaintances know of a reputable & established IT guy?

 

 





Please keep this GZ community vibrant by contributing in a constructive & respectful manner.


deankelsall
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  #2736312 29-Jun-2021 14:01
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Hi

 

I may be interested in your clientbase.  Im in the process of establishing a base in chch and already have a few clients.

 

Email me if your interested.  Dean@onlinecomputers.co.nz


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