I assume you did not undersell the business!
As you stated there is a direct relationship between price and time to sell normally if you sell something for less than it is worth it is easy to sell. You are not selling it though you are giving it away.
I have no doubt that you would tell the world that you sold it for the optimum price, my guess is that you dont want to admit that you "saved" £10k on agents fees only to knock that and more off the selling price. You under sold it by how much £20k?
Within your analysis you also ignored the time it took you put together the sales pack, organise the advertising, your time with the accountant, vetting the interested parties, interview the interested parties, negotiate etc
There was probably also additional solicitors fees as they probably had a lot more questions about the sale than they would have done if a professional agent had prepared the head terms.
What was your effective hourly rate? £80 an hour perhaps, add this to the cost of selling your business to work out the true cost to you of selling.
In fact you probably dont want to admit that you could have made more money by selling it via an agent. No doubt you will tell me that I am wrong, however if you had used a good agent, they would have covered their cost times two and made you significantly more money.
You make some good points there from an agents point of view!
I sold the assets of the business for 10x's more than entity originally cost me, and I had taken healthy dividends out of the business over a number of years. So to me it was a good deal and it was a good deal for the buyer, that is the important thing.
The discount on the sale price didn't bother me as I knew I would make a tidy profit if I sold at a certain price, which I achieved.
The time it took to prepare the packs, meetings etc was never really factored into the initial costs because most of these costs was covered by the return on my investment, as far as I was concerned.
And it didn't take that long putting together a sales pdf - an hour and a half.
Placing the ads - half an hour.
Meetings with potential purchasers - couple of hours at a time = 10 hours. Time spent on the phone = 36 hours. All this over a couple of months, so it didn't impact on the running of the business.
MOU = £250, plus a further £400 for my solicitor to look over the sale contracts when the buyer had their solicitor draw them up, based on the MOU.
Cost of having the initial contact emails sent to the accountant then sent to me = nil.
Cost of management accounts = £100.
ST advert = £360+Vat.
BFS advert = £99+ Vat.
The price achieved from selling the business via an agent may well have been a higher price than I achieved, but then it would have been as the agents commission is directly linked to the sale price- agents commission=%of sale price.
This paragraph is typical of agents;
There was probably also additional solicitors fees as they probably had a lot more questions about the sale than they would have done if a professional agent had prepared the head terms.
There wasn't in my case, and how many more questions can be asked if all the information is laid out to the buyer at the MOU stage and prior to solicitors getting involved?
In my opinion there is no one better to placed to answer questions on the business that is for sale than the business owner and the person that runs it day-to-day.An agent certainly cannot answer all the questions that are asked because they simply do not know the answers.
My experience of agents is based on these facts;
1. Agent 1:"We have 300+ business buyers on our books actively looking for businesses to buy."
Me:"Ok then why in six months did I not get one interested party based on your guide selling price and marketing efforts?" The answer I got was nonsense.
2. Agent 2: "We advertise your business in all the broad sheets and on our websites."
Me:"OK, you put my business in with hundreds of others? Can I have my own dedicated advert?"
Agent 2:"Yes but it will cost you x!"
I am not hear to bash agents because I do believe that they provide a service for business sellers that don't want to or can't sell their businesses themselves.
Did I undersell the business? No I sold the assets in a deal that suited both me and the buyer, and at a price that I was prepared to sell at, and a price that the buyer was prepared to pay, and that in my book is a good deal.
