I have a client who is wanting to sell up - he is a small carpet retailer and as asked me to give him a goodwill figure.
He rents a shop in a busy location, has no stock to value (customers select via samples and he orders direct - does not sell roll ends). With no assets how do you put a figure on goodwill ?
He relies on customers walking past his shop, he does have a number of returning customers. His profits show a steady rise over the last 3 years, but I am stuck as to how to put a value on his business.
I would get an Accountant with experience in sales to do it Julie as your PII won't cover you for that sort of advice.
Also, your client will be looking for advice on the the most tax efficient way of completing the sale.... And if they're not looking for advice in that area they should be.
Shaun.
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Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
He has been told it is beyond my remit and he should seek an accountants advice, the response to that I could not possibly repeat for fear of being stuck off the forum !!!!
But said I would pose the question anyway. Will be glad to see him go !
I wont tell you what I said back to a client when he used unrepeatable words to me once - because it was unrepeatable! But tell him - he could be making more money by getting the accountants advice - that should calm him down a bit. (or maybe not, lol)
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Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
Business valuation is such a specialist area; however, boils down to one key factor. How much is someone prepared to pay for it!
In terms of calculation there can be many key variables to use as the basis - gross profit, net profit, turnover, assets etc. etc. There are often standard industry bases that can be used.
To be honest though, if a client is giving you expletives because you are being honest then tell him it is worth a billion dollars, then walk away
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Phil Hendy, The Accountancy Mentor
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If so a mentor may be the way forward - feel free to get in touch and see how I can assist you.
I met with him yesterday, again stating I could not advise him further on this and recommended a couple of accountants who would be more than happy to help him. I left when he said that I would probably not be doing his accounts anymore..... `thank heavens` I thought.
Had a call from my client last night, he took my advice and sought help elsewhere with a Company specialising in selling businesses.
My query is, how do I process the sale when I complete his SA for year 15/16 ? He has a HMRC bill in excessive of 50 k (this is a combination of 4 years VAT and outstanding fines for SA), he has been advised his company is worth 95k.
