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Seller beware

22 May 2009

When it comes to maximising your sale price, it is essential to plan ahead and be thoroughly prepared - especially in the current economic climate. Karl Cushing offers a guide for potential vendors

"Buyers are very aware that it's a buyer's market, but with thorough, careful preparation vendors can help to mitigate this," says Paul Davey, managing director of business sales agent Dunham Davey Clugston. "By getting all your ducks in a row in advance you give buyers less chance to try to renegotiate terms down the line. The only potential "fast ball" then is financing - in this market anything short of a buyer having 100% of the cash in the bank is uncertain."

Tim Gooding, a director in the Ipswich office of property agent Christie & Co, says the current economic situation is a strange one, especially when compared with the last big recession. "In 1991 there was almost no market - it was a broader recession with almost no spending. This time it's more patchy. As a seller you've got to be very focused and listen to the advice given by your agent."


One thing that will have a massive bearing on the price you can ask - and achieve - for the business is the trading accounts, so a key priority is to make sure they are up to date and in great shape. Make sure you have two years' worth of audited accounts with more recent VAT returns ready to show prospective buyers.

"Remember, your accounts are one of your biggest selling tools - never more so than in this economic climate," says Andy Tudor, an associate at chartered surveyor Fleurets.

Bear in mind that prospective buyers will want to see evidence of profitability. If you are planning ahead and have six to 12 months to play with you could look at introducing some short-term changes to the business to make your accounts look more attractive. Consider introducing food and drink products that offer greater mark-ups and look for ways you can trim out costs from the business - even staffing - to improve your bottom line. Either way, ensure that your best trading periods are represented.

You should also look at the tax considerations relating to the sale in plenty of time. Seeking timely, professional advice from a company such as chartered accountant Kingston Smith can save you money and help to maximise your profits on the sale. Also ensure you are up to date with your PAYE and tax obligations, and think about what else you can prepare in advance.

"It's a very good idea to create a due diligence pack containing all the information potential buyers might need and you know will be required at the point of instructing the agent," Davey advises.

This pack could include copies of your licences and the lease; the rent review schedule; energy performance certificates; a list of suppliers; a record of any major investments and improvements you have made which can help to justify your asking price; and staffing details.

Your solicitor, who should have experience of dealing with licensed property sales, can help collate this information.

"One item that is often overlooked is a trade inventory, including details of fixtures and fittings and what is included and excluded in the sale," Davey adds.


A crucial part of the sales jigsaw is instructing an experienced property or business transfer agent. "Choose the agent carefully and ask to see details of other businesses they have sold," Davey advises. "You'll only sell the business once, so you need to be confident in the ability of the agent to perform. The lowest fee rarely correlates to the best agent."

He adds: "Be frank with the agent from the outset and tell them the motives for the sale, as this can have a bearing on the agent's advice, including the pricing and positioning of the business."

This point is also stressed by Tudor: "If the bank manager is knocking on the door, for example, or there are outside factors that affect the business, then let your agent know - they may be able to have an influence."

Remember that you are duty-bound to disclose any potential problem areas and issues relating to the business to potential buyers, so it really does pay to identify and address them in advance. Conversely, remember that potential buyers will be looking for ways they could grow the business, so with your agent think about how you could give this impression, for example by stressing the potential to grow food sales in a pub.


To present your business in the best possible light you should leave the property in good condition. Quick solutions that offer good returns include redecorating, making the grounds look more attractive, decluttering and deep-cleaning. And don't overlook the owner's accommodation, if there is any.

Fix any little things that need fixing. For more major works, construct a business case to see if the effort and spend makes sense: if it's not essential, and it's not going to make a big difference to your sale price, then don't do it.


Depending on your situation it may be necessary to conduct a "discreet" sale, especially if you are still trading. But keep staff informed where possible, telling them about your plans and ascertaining what their plans are. Showing you already have a strong management team in place that is willing to stay on will be highly attractive to some buyers, and this may be factored into the price they are willing to pay.

Conversely, if you don't tell your staff and they find out somehow that you plan to sell the business morale may suffer and staff may start jumping ship, affecting the business's performance and saleability.


Effective marketing and realistic pricing are key to any sale. A common mistake made by sellers is that they are unrealistic in the price they want to achieve.

"You really need to go to market with a realistic price," Tudor stresses. "If priced fairly, it will attract more attention, you'll get more interested parties, and as a result there will be more fighting to secure the property, which can only have a positive impact on the price achieved."

He adds: "The current high level of supply and low level of demand means buyers have considerable choice. If you are not realistic you could end up getting less for it in 12 months' time than you might do now if you are realistic."

When seeking valuations, get the agent to explain how they came to them - don't just go with a valuation because it is the highest. A good property agent will advise on how best to market the business to improve the chances and speed of a sale. In fact, they will probably already have people on their books who are looking for a business such as yours and when instructed they can get the ball rolling by contacting them immediately, which is particularly useful if it's a confidential sale.


When you receive offers, you and your agent will need to assess how serious they are to avoid wasting time. While you aim to maximise your sale price you don't necessarily want to go for the highest offer you receive.

Try to get as much information on the buyer and their situation, finding out how fast they can move on the sale and, most importantly, if they have adequate funding in place before you go too far down the road with them. A failed sale is not just inconvenient, you may miss out on other potential bids and in a falling market you will be losing money. Moreover, a long and protracted sale process will weaken your negotiating position.

One way to appeal to as many buyers as possible in the current economic climate and prevent a deal from falling through owing to lack of financing is to be flexible on your sale terms. Consider options such as vendor financing, whereby the vendor agrees for the buyer to pay the bulk of the price up front and pay the remaining balance when they are up and trading.

"Vendor financing has featured in a number of deals we've been working on in recent weeks where there has been a financial shortfall but a willingness on both sides for the deal to go through," Davey says.

Davey also suggests that if you own the freehold it may be worth considering selling the business as a leasehold concern and maintaining the freehold, which could open up a whole new market and increase your chances of a sale.

But whichever method of sale you choose, the key message has to be that if you manage the sales process professionally you stand a very good chance of maximizing your sale price, whatever the market.


  • Prepare up-to-date trading information ready for potential buyers to view.
  • Set a realistic asking price.
  • Make sure all the licenses, lease details and rent review information are available for potential purchasers and their legal advisors to review.
  • Remember that even minor presentational issues can impact on the desirability of premises to prospective purchasers.
  • Keep your staff informed - they can be a real asset when it comes to selling your property.
  • Keep your landlord or managing agent informed - when assigning a lease you'll need their co-operation as they will need to approve your prospective purchaser.
  • Instruct a solicitor who deals extensively with licensed property early on so they can start to prepare your file and gain access to the original lease, etc.
  • Address any items of disrepair at the outset as they will become an issue at a later stage if not dealt with.
  • Make sure you're ready to go. Have you made appropriate plans for your future? Will you have a new job lined up, and somewhere to live?
  • Choose your agent wisely - picking the right agent with knowledge of the local area, the marketplace and likely buyers can make all the difference.

By Andy Tudor of chartered surveyors Fleurets

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