Today (19th November) is World Toilet Day and with that in mind, we wanted to put together a little post for anyone thinking that walking away from a struggling business. We explore some of the hidden value in businesses, that you may not have considered.
Customer Contracts
If your business has contracts with its customers, there could be value in either selling them or transferring these to a competitor.
For example, a small contract cleaning company that may have a range of contracts (some of which still have time remaining) could be sold to a competitor for a substantial fee, or even negotiate a future fee split.
Commercial Leases
If you are tied into a commercial premises lease and you are considering closing your doors and effectively handing back the key to the landlord, you could find yourself with a rather large bill landing on your door. Unless you are approaching a break clause in your lease, or your landlord accepts it back without any repercussions, the impacts can be devastating.
We have sold businesses for an effective £1 in the past, mainly to allow the exiting owner to leave without having the burden of servicing the remaining term of the lease, and or putting back the building to its original state. This hidden gem can sometimes give a great opportunity to an acquirer, but with them taking on the responsibilities moving forward.
Staff Redundancies
Employing staff is a costly business, but if you decide that your small business is no longer performing and you need to effectively walk away, you will be forced to make the staff redundant and make statutory redundancy pay, which can quickly add up.
It may be wise to sell your business for less than you’d normally expect, in order to pass on the responsibility to a new owner (under TUPE regulations) and forgo your responsibilities around this.