This business supplies (mainly) imported, semi-finished steel components to the UK office furniture manufacturing industry. Its annual sales are in the band £250k to £500k but it generates a very low gross margin producing no more than a reasonable living for the owner. The company operates with some stock at a UK storage facility but most goes direct from the manufacturer to customer. The previous owner ran the business from home with the assistance of a part-time bookkeeper.
The first purchaser was rejected because of doubts about his ability to run the business satisfactorily (and therefore pay any deferred consideration). An experienced, private purchaser, who owns other smaller businesses, ultimately acquired this business as a good fit with his existing operations and with the expectation of substantial growth.
The negotiations were complicated by the requirement to find a satisfactory formula to compensate the seller for an expected higher level of sales coming out of the recession. Once this was agreed it became a straight-forward deal with purchaser and seller working closely together to overcome issues arising during the legal stages.