I’m not sure whether it’s Brexit or mid-summer madness but we seem to be inundated with buyers who want to buy a business using other people’s money. Last week I had a crowd who claimed to have “access to PE firms to raise funds and won’t need financial support.” They made an offer of £2m to buy a business making a profit of over £600k pa and with nearly £2m of Net Assets of which £1m was in cash. But the offer was to pay £1m on completion and the rest over 4 years. When I had the temerity to point out that their offer meant that they were only paying on completion an amount equal to the cash at bank figure and made no allowance for the goodwill premium, they got upset and called me unprofessional! Really? Do these people think that we are so stupid that we don’t understand highly financially engineered offers?
There is a worrying and growing trend that all sorts of people seem to think that they can buy a business by borrowing against its assets and then getting vendor finance for the balance. You can’t!! As I keep pointing out, why would a vendor lend what is effectively their pension pot to a complete stranger? At Turner Butler we are now pushing back hard against these sort of buyers, they are a waste of our and our vendors’ time. If you are one of them please don’t apply for a business being advertised by us, you will be given short shrift and even if you threaten me with physical violence (which has now happened on two occasions!) it will not make any difference.
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