Discussion
the boss of the co i work for is giving up his "hobby" and closing down,a couple of peeps working there ,me included want to buy the assets/customer list, we will need to get a loan of aprox £75,000 between 2 or 3 of us,where is the best place to get a loan?
any nasty suprises/tricks attached to these types of loans (apart from the home at risk one)
any nasty suprises/tricks attached to these types of loans (apart from the home at risk one)
If the business is good, has good history, profits etc then you might be able to get business loan out of a bank. Then push for one without a charge on your personal property just the assetts of the company.
I got one with a charge on the co. and a personal garentee. Which they admitted wasn't worth much as it was my company and I would through everything at it to keep it afloat. To that end I would have nothing worth taking if it all went pete tong.
I got one with a charge on the co. and a personal garentee. Which they admitted wasn't worth much as it was my company and I would through everything at it to keep it afloat. To that end I would have nothing worth taking if it all went pete tong.
Have you considered a structured earn-out where you pay him off over time (say 5 years)?
This is less painful for you, has certain tax advantages for both sides (though you would need to speak to someone like Eric Mc to get details) and big practical advantages in that he is more likely to give you the benefit of his expertise over the period and a whole lot less likely to change his mind and set up a rival company just down the road
Just a thought....
This is less painful for you, has certain tax advantages for both sides (though you would need to speak to someone like Eric Mc to get details) and big practical advantages in that he is more likely to give you the benefit of his expertise over the period and a whole lot less likely to change his mind and set up a rival company just down the road
Just a thought....
thanks for yr replies,basicly the co is /was his hobby,multi millionare with too much time on his hands so no chance of him setting up another,i know more about the buis than him and ive only been there 3 months!anyone want to name names on banks that will do the best deal or are they all the same?
The DTi do loans for this sort of thing.
Although you say you know more about the business than the owner, you still need to do due dillligence.
£75k seems a very small amount of money to pay for a business that will employ three people. It suggests that the Gross Profit is something like £12k per year - from which you will need to pay overheads, salaries, etc.
I know you say the current owner is a millionare, but people don't become millionares by giving stuff away. I'd check this out very carefully.
Plus, consider if the owner had any significant influence on the customers. i.e, without him, are they still going to be there in a year's time.
It might all be OK but it's your money so be cautious!!
Although you say you know more about the business than the owner, you still need to do due dillligence.
£75k seems a very small amount of money to pay for a business that will employ three people. It suggests that the Gross Profit is something like £12k per year - from which you will need to pay overheads, salaries, etc.
I know you say the current owner is a millionare, but people don't become millionares by giving stuff away. I'd check this out very carefully.
Plus, consider if the owner had any significant influence on the customers. i.e, without him, are they still going to be there in a year's time.
It might all be OK but it's your money so be cautious!!
steeviebee,the company only consist of 2 vans and several tons of equipment,offices are rented on a monthly basis so not too much to buy,he bought company on a whim,ive known him socially for 15 years and i dont think he,s going to rip me off.
i know someone in dti so ill have words when i see him.ta again for your help
i know someone in dti so ill have words when i see him.ta again for your help
Have you seen any accounts yet?
Get hold of the business accounts for at least the last three years. Also, get hold of draft accounts up to the most recent date as possible. Get a professional to review the figures as part of a due dilligence check.
If he is already a millionaire and he treated this particular business as a "hobby", he may not have cared whether it was profitable or not. On the other hand, it would be essential for you that the company really is profitable.
Get hold of the business accounts for at least the last three years. Also, get hold of draft accounts up to the most recent date as possible. Get a professional to review the figures as part of a due dilligence check.
If he is already a millionaire and he treated this particular business as a "hobby", he may not have cared whether it was profitable or not. On the other hand, it would be essential for you that the company really is profitable.
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