West Midlands: Retiring owner sells Beautystone Fireplaces for twice net profit, plus net assets

Established 35 years ago by the owner, this consistently profitable retailing & manufacturing business occupied a terrific main road position. We achieved a 100% share sale equivalent to a multiple of twice the adjusted net profit, plus net assets. Retiring owners are regarded as ideal by many buyers, in some cases for reasons that are not in the sellers’ interests.

“Plan to retire on the up!”
Buyers like to buy businesses from retirees because it is a “positive” reason to sell (i.e. it doesn’t imply a lack of faith in the business). Too often, though, we see owners plan for retirement, over several years, by winding down. They take more time off, don’t look after the marketing quite as well as they used to and quite enjoy not pandering to new business prospects whom they find irritating, even if potentially highly lucrative. No surprise then that the value of the business winds down too – sometimes so much that, even after cash-flow discounting, the owner would have been better off selling years earlier. Fighting human nature is hard but, wherever possible, we advise those who intend to sell and then retire to plan accordingly, perhaps including key staff members in the plan to incentivise them to maximise value at the time of sale, so facilitating a much happier retirement. Retirees who realise a top price are better off and, because of the ‘selling short’ psychology referred to in the lettings agency story above, more content as well.

John Hatt is a Regional Partner in The Business Partnership, who have been helping business owners sell their businesses since 1979. You can learn more about John here.

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