Achieving a good business sale even when business is not profitable
Profitable businesses are bought and sold on a multiple of average maintainable earnings, but what if the business is losing money?
Mum & Dad business in removals & storage operating at a loss. Assets assessment revealed:
- Active database generating leads and new work
- Services offered include long term qualifying storage rental but the volume was not sufficient to cover rental costs.
- Removal business highly competitive putting pressure on the margins required to win jobs
- Loss situation unsustainable and owners wanted to move on
- Sold as an “add on” business to an existing removals and storage company operating in the area
- The purchaser could increase revenue at a marginal cost because they already had unutilised space available
- The purchaser bought a phone line that rang and new data base to mine which was of value to them