Valuing stock if we need to dispose

[nk400]

I may be taking over a business which has some degree of risk attached, so I'm trying to work out what my potential losses could be.

The main investment is buying the stock from the existing owners, valued at about £50k. This stock is high quality, i.e known designer brands mainly clothing but some other products too (all designer branding).

So my question has 2 x parts;

1) Is there anywhere I can dispose of this very quickly if required? (i.e faster than selling piece by piece on eBay for example)

2) What sort of value (obviously this will be approx) would I be able to get for it if needing to sell quickly (timescale lets say 2months).

Just trying to guage the 'worst case scenario' if the business went bad and I needed to liquidate.

Any input appreciated.

Thanks!

 

[Gord]

The main investment is buying the stock from the existing owners, valued at about £50k. This stock is high quality, i.e known designer brands mainly clothing but some other products too (all designer branding).

Can't help directly with your questions but, my 10p worth.
Be very cautious about the value of stock.
It's book value may have about as much worth as the book Assets of some banks.
The value is not related to what they paid for it, but for what it can be sold for and if it is fashion goods, they may well have a very short or expired high value life.

Clothes and designer goods are outside my area of knowledge, but I have seen enough dodgy stock valuations in my time to make me very cautious in this area.

 

[nk400]

Thanks Gord. Yep I realise the value is not related to what was originally paid for it. This is basically why I'm posing the question, as I have no idea what we could realistically get for it if trying to liquidate quickly.

I realise it is kind of a 'how long is a piece of string question' but anything rough would still be helpful. I think I've seen somewhere quoting 30% of current trade value....

 

[Billmccallum]

value varies dramatically between brands, but a rough guide would be 15% of list price.

 

[Blagger]

You could try the wholesaleforums.co.uk, no experience with them but I'm sure you could get a taster if anyone is interested. There are quiet a few companies who deal in surplus stock, search google for them, I doubt you would get much selling it to them though as they always want to pay next to nothing.

 

[Vaheed Akhtar]

Remember, your stock is only worth something when it's in season - so make sure you've done your homework on what type of stock it is (ie..what season) and then work out how long you have to sell it at your ideal mark up price. After that you will need to reduce it further in order to rotate your stock for new seasoned stuff. If I were you I would find out what they paid for the item and what it will be worth at the end of it's lifecycle.

Really, stock sold on to a new owner should only be valued at what it was bought for and not have any profit margin attached to it.

 

[liquidauctions]

When you sell stock at bankruptcy auctions it normally sells for about 10% of its actual value. Thats for a fast sale. Selling on eBay in a lot will usually get you back about 20% without trouble

 

[Bri]

Vaheed is right, especially the market you are buying into. Higher quality clothing has a finite shelf life.
Is that the risk you are talking about.
If the risk is different what is it about the business thats attracting you?