We were engaged, as Business Valuers in a family law matter, to arrive at a fair market value for a Butcher business within a well known shopping centre. The business was an excellent business with very healthy profits. Despite the decline in sales, the business was able to increase margins and keep operating profits relatively stable. The operation of the business was highly reliant on the operation of the owners, thus it was viewed a majority of the goodwill rests with them. In addition the business had a substantial re-fit clause due on the business, and with the lease due to expire within the next 18 months, it would most likely be the case that the shopping centre would enforce this re-fit prior to any new lease , extension of the lease or assignment of lease been granted. This re-fit cost had to be considered as it would dramatically affect the return on capital spent to purchase the business.
Ultimately, this business was not ‘prepared’ for sale and as a result the likely value is reduced. Thus if you are looking to sell your business speak to a professional advisor to ensure your business is prepared for sale and secure a maximum sale price.