[Scrimble]

I am curious to know what the views are of valuing a large residential window cleaning, for example ran by staff with turnover in excess of 500k per year?

not a sale of just the customer base I mean full business office staff vehicles equipment etc

[Ralphie]

You would have to give lots more info to get a very broad value.

Any prospective buyer would need to know:

Age of business.
How many vehicles, are they leased.
Office leased and rental cost.

Too many questions would need to be answered.

Also staff would have to be TUPE'd across, you cannot sell them, it's illegal.

[Jay Le Huray]

yes as previously stated, many questions need to be answered , also you say it's a £500.000 turnover but what is the net profit?

You may need to get a good accountant to look it over, perhaps someone from Dragons Den 

[Mark Dee]

You need to first find out what is for sale, starting with the legal status of the business. LTD co or soletrader, if ltd co is it a share sale or asset sale ?

Then get down to the numbers, the nitty gritty is its trading position, how much free cash it generates, what its liabilities are (share sale you will buy any outstanding liability the ltd co has or will have)  what are its assets nett of any outstanding liabilities etc.

Remember, potential has no value at all you are buying what currently exists not what will happen in 12 months 10 years time.

Be careful, dont get too excited, the seller will usually think their business is worth more, the buyer will think it is worth less. Deals finish somewhere in the middle. The way the deal is structured will affect the final headline price and buyers usually dont pay all the money agreed upon on completion.

[Scrimble]

I am saying this hypothetically, and as a ltd company with a new director (owner) buying in and the outgoing owner director stepping down so the business owner is replaced and the business carries on

with a 10-20 percent net profit

I am not talking about a new window cleaner coming in and taking over a round and customers being informed etc, I mean a business owner being bought out, the staff having a new boss etc

[Mark Dee]

I am saying this hypothetically, and as a ltd company with a new director (owner) buying in and the outgoing owner director stepping down so the business owner is replaced and the business carries on

with a 10-20 percent net profit

I am not talking about a new window cleaner coming in and taking over a round and customers being informed etc, I mean a business owner being bought out, the staff having a new boss etc

Is the nett an ebitda figure?  Thats a fair spread on a nett margin.

You are trying to find a "rule" to apply to business valuation and there isnt one. If I could put down £20,000 and the seller  offers finance of the balance over 2,3 or even 10 years it will affect the price. The rules change as the numbers move higher even for extremely well funded buyers they wont want to part with substantial ammounts of cash, unless they are paying pennies on the pound.

[Ched]

Sometimes business are values at say 3 times yearly profit + assets. Then you also have to consider liabilities like staff - redundancies/tupe rules etc.

[Mike Burd]

A business is typically valued at 3-5 x profit. If your profit is 10% of 500k, between £150-300k I’d think.

[Matt.]

I would slightly differ from 8 weekly, and if u have half a million turnover with 20% profit being 100k …… I wouldn’t move for anything less than a years turn over

[Mark Dee]

I would slightly differ from 8 weekly, and if u have half a million turnover with 20% profit being 100k …… I wouldn’t move for anything less than a years turn over

So you would work for 5 years to get your investment back and then in year 6 make 100k?

[Smudger]

Its not that straight forward - you suppose that the biz stays still - you need to look at the rate of growth p/a
so profit % may stay the same but be a larger amount per year.

No one here, as far as I know has sold a business with multi personnel and assets - so everything here is total pie in the sky.

Get in touch with a company that will value for biz properly and go through the steps of what its worth and the pitfalls

but then again you have to pay for this service .....

Darran

[Mark Dee]

Its not that straight forward - you suppose that the biz stays still - you need to look at the rate of growth p/a
so profit % may stay the same but be a larger amount per year.

No one here, as far as I know has sold a business with multi personnel and assets - so everything here is total pie in the sky.

Get in touch with a company that will value for biz properly and go through the steps of what its worth and the pitfalls

but then again you have to pay for this service .....

Darran

If the business grows then the growth belongs to the new owner. You are paying for what is not what maybe.

Beware of the general "business brokers" many are charlatans. Google is your friend.

The seller sets the initial price, the buyer and seller  negociate the final price. Its a complicated subject, one I have spent a fair amount of time studying. I was contemplating selling a business with various fixed assets, multiple staff and turnover at a higher figure than the OP's  theoretical one.  I dont have a cleaning business but the principles of buying and sellng a business remain the same.

[Smudger]

thats part of the price "potential" its forecasting thats what your buying into....

and google doesn't have any charlatans ?

Darran

[Bungle]

Reading this thread and a picture of our Nigel cleaning windows popped up 

[Mark Dee]

thats part of the price "potential" its forecasting thats what your buying into....

and google doesn't have any charlatans ?

Darran

You as the buyer may see potential in the business but the seller doesnt get paid for the potential. 

For the sake of argument, say the OP's "business for sale" is a cleaning business operating in your  area it runs 9 vans has 12 staff cleaning trad. Average house is £7.50 cleaned fortnightly, very compact. 2,200 customers all domestic.  Customers pay mainly cash 60% pay after clean.
You have a cleaning business 3 vans 4 staff cleaning WFP. Average house is £12 cleaned 4 weekly not as compact, the other business has customers right next door to where you are already cleaning. Your customers pay go cardless. If you could buy the trad business and convert it to your business model there are some great cost savings to be made. Are you going to pay more for the trad business because it has potential?  It may be worth more to you than a similar buyer based 80 miles away with no other work in the area who also cleans trad. You can "fix" it and make it more profitable, the seller doesnt get paid for that, you do. There is risk to implementing change your first objective is to minimise risk.

There are "business brokers" who advertise online who's business is signing up businesses for sale, they will tell a seller whatever the seller wants to hear in order to get their business listing. One of their favourite tricks is to tell a potential customer they have a data base of waiting buyers willing to pay £'sssssssssss for a business like yours. Less than 1% of these businesses find a buyer within 24 months.  I wont name these "brokers" here you will need to google them.

Buying or selling a business is a mine field  be careful and get yourself educated. (general statement not aimed  directly at Darren)

[Teaboy]

how many £500k + window cleaning businesses are there really though!

maybe a few that are domestic / commercial but solely domestic I would guess there is only a few

[Smudger]

I bet there's more than you think.....

Darran

[Ggh]

Is the business owner taking a wage before profit calculated? Rather than dividends or mix of both?

[Richard iSparkle]

how many £500k + window cleaning businesses are there really though!

maybe a few that are domestic / commercial but solely domestic I would guess there is only a few

There are loads