Advice you can count on for
business sellers and acquirers

Frequently Asked Questions

We have tried to pre-empt questions that visitors to our website may have based on the questions we have been asked, most frequently, over the years.  However, if we have not featured the question that you have in mind, please Contact Us or call us on 02476 100476.

Assisting Sellers - Frequently Asked Questions

Why is Anderson Shaw’s preliminary valuation of my/my client’s business lower than another I have received?

The answer is, usually, that some advisers/brokers give inflated valuations in order to 'entice' a client to appoint them to sell their business.  Anderson Shaw aims to give a realistic valuation that can be used to enable the vendor to make an informed decision about whether or not to sell and to plan his/her financial affairs post sale.  We will not undertake the sale of a business unless we are satisfied that the vendor’s expectations of value are aligned with our own.  The same honesty and integrity will be applied in all of our dealings with our client throughout the process.

Who, at Anderson Shaw, will handle the sale of my/my client’s business?

The whole of the sale process will be handled by Richard, Chris or Peter.  Unlike dealing with larger organisations the same person will discuss the valuation with the owner, visit the business, write the Briefing Document, and market the business.  The depth of knowledge gained about the business through this process translates to talking more intelligently about the business to potential buyers, negotiating to Heads of Terms more effectively on the vendor’s behalf, and, we believe, ultimately achieving a more successful sale.

Will the sale of my/my client’s business end up in an auction process?

We always aim to deliver 2 or more parties prepared to table offers, but this does not usually lead to an auction or sealed bid process.  In our experience buyers do not like this type of process and they react better to quiet encouragement from us to make their best bid. Ultimately, the vendor will almost certainly prefer one of the offers over the other(s) and this will not always be driven by price.  There are many factors that determine the attractiveness of an offer including: time required to complete the deal; the structure of the offer; the level of handover required and personal chemistry between buyer and seller.  An important skill of the adviser is in keeping the 2nd and 3rd parties 'warm' and the relationship good, should the deal with the 1st choice fail to complete.

Why do you always advertise businesses with a Guide Price?

In our experience, advertising without a Guide Price does not lead to 'fantastic' offers but to 'silly' ones that simply frustrate the process.  We have the experience and expertise to set a sensible Guide Price for businesses operating in the manufacturing, engineering and B2B service sectors.  Listing a business for sale with an undisclosed price puts off many buyers, and others who search business sale websites using price as a criteria will not typically find a business without a Guide Price.

What proportion of businesses does Anderson Shaw successfully sell?

Our records show that Anderson Shaw currently successfully sells 85+% of those businesses we are mandated to sell.  We measure this on a rolling 3 year average and exclude those businesses that don’t sell for reasons beyond our control.  Reasons beyond our control include: a significant deterioration in the performance of the business; a problem with the buyer/buying company; a change in personal circumstances; major economic shocks etc.

We believe this success rate is higher than most other Advisers/Business Brokers for good reasons:

  • We only sell businesses operating in the manufacturing, engineering and B2B services sectors, and we believe this specialisation contributes to our success.
  • We only typically represent 15 to 20 businesses at any one time and this means that success in each and every case becomes a matter of personal pride (and financial necessity!).  If a business is ‘sticking’ for any reason our reaction is to redouble our marketing efforts, not move onto the next project.
  • Our fees are almost usually heavily dependent on achieving a successful outcome, which we believe is the right approach. We expect to be rewarded if we succeed, but not if we fail.

I am worried that news of my/my client’s business being for sale will leak to employees/suppliers/customers. What measures does Anderson Shaw take to avoid this?

This is often a major concern for vendors.  We will do everything we can to avoid leaks.  When we market a business, we always do so on an anonymous basis.  When buyers ask for further details, before providing these, we check that they are bona fide and ensure they sign up to a Confidentiality Agreement.  Sometimes it makes sense for vendors to brief key employees/suppliers/customers about their plans in case, despite our best efforts, a leak happens and because, of course, they will need to know in any event once a sale is going through.

How does Anderson Shaw charge for Business Sales?

We always charge a small commitment fee when the vendor signs our Business Sale Agreement - this is usually £750.

The majority of the remainder of our fee then depends upon the successful sale of the business and this is pitched at up to 5% of the consideration achieved, depending upon the value of the transaction.  We charge 1 progress payment before the sale completes when the client signs off the Sales Details document and this payment is deductible from the Success Fee.

 


Assisting Acquirers - Frequently Asked Questions

We have already identified some companies we think could be appropriate acquisitions. Can you help us with these?

Yes.  We welcome the acquirer’s input to the search process.  Your expertise in the sectors we are searching is always going to be far greater than ours and this input helps to refine the search criteria and improve the efficiency of the process.  Once a list of potential targets has been established, it is our job to ascertain whether the business could be for sale and, if so, to start the information flow.

Can Anderson Shaw assist with the purchase of businesses in administration / liquidation?

Yes.  However, it is worth noting that businesses purchased either in or just before administration / liquidation require a very different approach because of the timescales which have to be met, the absence of time for due diligence and the usual requirement for 100% cash at completion.

How does Anderson Shaw Charge for providing Acquisition Services?

We ask clients to agree to engage us for a minimum period, usually 3 to 5 days, on a reduced day rate, for the initial search work which enables the client and ourselves to be satisfied that the services are delivering from the client's point of view.  Days beyond the initial number have to be pre-agreed by the client.  Once a target has been identified, clients can choose from other services as required and these are charged on a normal day rate basis.  In the event that the client acquires a company we have been in touch with an additional success-only fee is payable. 

 


Business Valuations - Frequently Asked Questions

Why are private companies valued on a lower multiple of profit than publicly quoted (stock exchange) companies?

There is a very significant size difference between quoted companies and all but a handful of private companies and, in reality, there is little similarity between the 2 types of enterprise.  The key reason why the relative value of quoted companies is so much higher is because there is a ready market for the shares and it is a market dominated by large institutional investors chasing returns.  In contrast to this, there is a very limited market for private company shares and almost no market for anything other than a controlling interest in private company shares. 

How does Anderson Shaw value a minority as compared with a majority private company shareholding?

In short, we do not.  We only ever value 100% of a business.  In most cases, shareholders will assume, or a Shareholder Agreement will state, that shareholdings are valued on a pro-rata basis.  If this is not the case, it becomes extremely difficult to value a minority stake because, unless there are blocking rights (normally requiring 25%+) or a right to and track record of dividends, a minority shareholding in a private company is technically worthless.

I am/my client is involved in litigation and the Court has asked for a valuation of my/my client’s business. Can you help?

Yes, through our association with an expert in the field, we can provide valuations for the Courts.

How does Anderson Shaw Charge for Business Valuations?

We are always happy to provide business sellers with a preliminary, verbal valuation for no charge.  If a formal business valuation is required we charge on a day-rate basis and at present this is £750 + VAT.

For small uncomplicated businesses, we allow about 1.5 days for a desktop valuation.  For larger more complicated businesses we will do our best to provide an estimate of the time required to carry out the work.  Where the valuation is being carried out to resolve a dispute which is not going to litigation, we are happy to try to work with both sides to ensure they have appropriate input to the process and to explain the thinking behind the valuation we produce.

If you need a valuation for the Courts this would be charged on a different basis - please contact us if you wish to explore this.


Exit Planning - Frequently Asked Questions

How far in advance of a sale should a vendor begin Exit Planning?

Some would say that a business owner should be planning his/her exit from the opening day of the business.  In practice, we think there is a case for planning up to 5 years ahead.  At this time, it is worth finding out what the business is worth today and how this compares with the vendor's financial needs in 5 years time.  To the extent that there is a gap, Exit Planning can help to address this.  Even if there is no gap, there will be a number of worthwhile actions that the vendor can implement to smooth the sale process.

Can Exit Planning be worthwhile for business owners who wish to sell 'immediately'?

Yes, definitely.  We have made some suggestions about this on our 'Short Term Action Areas' webpage.  Even if the vendor does no more than have a tidy-up this will increase the attractiveness of the business to buyers.  There are also a number of preparatory actions that can be taken to make the sale process smoother.    

Does Anderson Shaw have the expertise to advise me on all of the Action Areas listed on the website?

No, our role is to advise vendors about the value of the business and to provide overall guidance as to how this value may be increased with the benefit of an Exit Plan.  The business owner will often be able to undertake much of the work him/herself but there are also skilled consultants who specialise in Exit Planning and it may be worth engaging one such.  We can introduce vendors to people we have found to be skilled in this area.



Anderson Shaw has offices on the outskirts of Coventry and provides business broker and corporate finance services for clients throughout the Midlands and the UK.

Read more about us here