Looking at a business for sale with SAV

[TraeyW]

Evening! I am new so be gentle with me! we are looking at buying a shop and the stock is SAV. We would not want to buy all the stock and wonder if it would be usual to just negotiate on those items we did want - is this a possible deal breaker?

 

[mhall]

Everything is negotiable - including the value of any stock. If there is some stock you don't want put in an offer that reflects the value of the stock you do want - you will be getting the rest for free and can dispose of it as you wish.Many sellers think the stock is valued at what they paid for it, but it should actually be valued at its true worth to the buyer - in this case - you

 

[Talay]

I recent service business acquisition had stock valued at around £10,000 by the vendor and yet I valued it at around a quarter of that. In the end, we settled on just over 1/3rd of his estimate.

A retail business would have a much higher stock figure but unless they have data showing stock turnover, aged and discounted and a lot of other metrics, I would value it at a little less than i thought they could shift it for in a hurry and outside the business. I doubt many would get 10% of retail for most. A bullion dealer might do better though !

 

[Socio South West]

Stock valuations can cause significant problems, and you are well advised to have an in depth discussion about the stock with the vendor before you make the deal binding.

You would be quite within your rights to ask for all invoices for items on the stocktake and from that you can see how quickly stock has been moving, hence be in a stronger position to negotiate on slower moving stock to the point of getting some items totally written off. However, depending on the record keeping, this could take ages and be very expensive to complete thoroughly.

Everything can be negotiated: I recently did a stock valuation for a company being taken over, and negotiated result ended up at 20% below the active stock cost price, plus a fair amount of items written off by the vendor and taken at no cost by the purchaser.

 

[oldoakey]

We bought a shop a few years back with stock that mostly wasn't to our liking.

After we took over all of this stock was put on clearance sale at some ridiculous prices (we didn't pay a lot for them) but the goods were well under normal retail prices to the customer. So they were sold over the following weeks and during this time the new stock arrived to fill the spaces.

This gave us some much needed cash flow straight away, and gave the customers the chance of a bargain and us to introduce ourselves to them.

Key is don't over pay for the stock, try and find out which is oldest, slowest moving lines and negotiate hard.

Oh and one more thing - Make sure you put under new management signage up so that people do not think the shop is closing down.