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Freehold Sellers Online Help

Contents and Links:
Freehold Valuation
What is a Freehold Valuation
Preparing for your Purchaser
Facilitating a Smooth Change

Freehold Valuation

How can I achieve the best value for my business?

Plan ahead. Ensure you have the accounts available for your last full trading year and preferably the previous two years. Have copies of your VAT returns since the last year- end accounts and any management figures you have to provide a complete up-to-date picture of how the business is performing. Plan to build this up as far as you can the year before you want to get out, not just the current trading period.

The principle factor being considered in all of this will be the trading performance and profitability of the business, the potential of the business, theme, quality of presentation and importantly, the pub's location.

What is a Freehold Valuation?Back to Top

Freehold pubs can often command prices around 2 to 3 times the pub's net turnover.

However here are a few rules of thumb for a basic pub valuation:

You may be able to secure anywhere from 1.6 to 2.4 times net turnover, but most food led pubs will fall in the 2 times turnover category, falling as the outlet becomes more food led. You usually get a higher multiple the more wet led the business and the more able the purchaser is to develop the business further. However the bigger the turnover the less likely multiple.

We mean that if you are achieving a million-pound or more net turnover the less likely you are to secure a 2.5 times turnover multiple. You have been a highly successful operator, who in turn might scare off interested pubcos or similar, where they need to attract same-minded business people.

Every seller has his or her own reasons for selling. If you require a speedy sale you are advised to be realistic with your valuation. If you are not in a hurry you have the luxury of beginning with a higher price and seeing how the market responds. No interest in your property may mean that the price is too high.

If you use a Broker/Valuer or Business Transfer Agent. Be prepared for fees that may vary from 0.5 - 3% of the sales price. There are no hard and fast rules and lower percentages will apply to higher values. * Also you may have to up front costs i.e. advertising and marketing expenditure.

* Please note that The Pubshop Ltd Online Advertising Service has a fixed fee of 500. Other valuation and sales services can be accessed at any time with fees specifically agreed for the assistance required

Preparing for your Purchaser Back to Top

Have a summary of the last three years abridged Trading Profit & Loss Accounts, they should present your business in the best light enhancing your net operating profit by excluding expenses which, are personal to you, the proprietor and any unusual or one off expenses. Items normally excluded, are those personal to you such as mortgage interest, depreciation, private motoring, pension payments, professional fees etc. If there have been major repairs in one year then these should be highlighted.

  • If you are in the middle of a financial year, copies of your VAT returns will be required for the current year.
  • It would be useful to ask your Accountant to give early consideration to the apportionment of the sale price between the freehold interest, the goodwill and the inventory.
  • It would also be helpful if your accounts show the split in turnover between wet sales, food sales and accommodation, if appropriate. This would then allow a purchaser to see the operating profit from which they may be able to obtain finance if necessary and plan to manage the business. All purchasers do not necessarily want to run the business themselves, they may want to know that they can afford to employ managers.
  • Prospective purchasers and lenders would appreciate a comparative breakdown of monthly turnover figures as this helps them understand if your business is seasonally affected.

Site Plan

Provide a copy of the Land Registry Plan for interested parties.

Between you, you can check the area of your property, define boundaries etc. If the Land Registry Plan is not available you can get an up to date copy of the Ordnance Survey Plan. This will speed up the search process when a buyer is found and a copy can be sent to the purchaser's solicitor when terms have been agreed.

Planning

If you have the benefit of any planning permissions, make the copies of the plans and consents available to the purchaser, especially if these are likely to enhance the value of the property.

Title deeds

You should either arrange for the Title Deeds to be sent to your solicitor or, alternatively, let your solicitor know who your lender is (and the account number), so that the Deeds can be requested. You should also let your solicitor know approximately how much is currently outstanding on mortgage and whether there are any other charges secured against the property and/or the business.

Inventory

You must have an inventory of the trade furnishings, fixtures and equipment prepared when a sale has been agreed. (The Pubshop Ltd would be happy to accept your instructions on this matter). This will form part of the sale contract. You need to make purchasers aware beforehand if any particular items are to be excluded.

Fire Certificate / Environmental Health

If your premises require a Fire Certificate then you will need to supply a copy to your solicitor. If an Environmental Health Officer has inspected the premises recently, then you should provide a copy to the purchaser of any recommendations made by that officer following the most recent inspection.

Contents
Freehold Valuation
What is a Freehold Valuation
Preparing for your Purchaser
Facilitating a Smooth Change