Most agents deal with fairly simple properties; an office block, a house, a flat. They’re interested only in the bricks and mortar. But business transfer agents take it further – they sell the business as well as the premises. They don’t have a high profile. The national obsession with house prices passed them by, and they deal in private businesses, not the large stock exchange quoted companies which make the headlines.

I spoke to Jeff Powell, an experienced business transfer agent, who sits on the committee of the Institution of Commercial and Business Agents (ICBA), about the work of business transfer agents and the challenges facing them.


Q How does the business transfer agent differ from a commercial property agent?

A It’s much more complex. Residential estate agents have an easy life because their transactions are fairly straightforward, either freehold or leasehold on fairly standard terms. Commercial agents have to deal with more complexity, for instance there are dilapidations and so on. We then have the extra layer on top of that, of dealing with the business itself, whether it’s successful, how much money it makes, what it’s worth. The complexity is all about the business – not the property. If we’re selling a leasehold, then the leases are exactly the same as you’d see in any commercial practice.

We have to understand accounts, and we have to be able not just to read the accounts but also to know how to interpret them in terms of the business. Accounts can be up to eighteen months old by the time you get to see them, so we also need to know how to get an up to date idea of how the business is doing.

We also need plenty of general business knowledge. For instance, I have to understand employment law – if there are employees working in the business, what are their rights, what is their entitlement to redundancy and so on.

When you’re looking at a business you also need to understand the sector it’s in. If I’m selling a care home I have to know the standards applied, the staffing levels needed and the cost of care. As a business transfer agent, the amount of work you need to do on any individual business depends on how often you deal in that particular sector. After a while dealing with one kind of business, whether it’s care homes or pubs, you get to know how they work. You will tend to specialise in four or five different areas, as at any time one of them will be going through the doldrums.


Q How do you market a business?

A The market is different from the residential market – it’s a very narrow market, so you have to approach it in a different way.

At the popular end, particularly with people who hadn’t run their own business before, the big sellers used to be post offices and pubs. You can advertise those fairly openly. At the other end of the scale, the corporate end, there are fewer potential buyers. You can market these businesses without any advertising – the person buying will be in the trade already, or in an ancillary trade. So you approach them directly. It keeps a sale confidential.

In specialised markets we’ve been able to sell to a buyer already in the sector; for instance alarm installation companies, a safety products business – fluorescent vests, that kind of thing – printing companies and wholesalers.

The range of size is very wide. You can start from £3-4,000 for a lock-up business, but we tend to deal more with the upper end of the market where businesses can go for £5-10 million.


Q At the bottom end of the market, what kind of buyers do you find?

A Unemployment creates a market. Sometimes, unemployment actually makes people more free. People often want to run their own business, but have always preferred the reliable income that comes from a steady job. If they’re made redundant, often that’s what galvanises them into looking to buy a business.

Some can be a little naïve with their dreams of running a pub; they idealise the lifestyle and they’ve underestimated the work involved.

My loyalty is with my client, of course – I’m trying to sell the business for the best price – but if I feel there is something the buyers have overlooked, I may recommend they take advice.


Q What is the fee structure – is it all commission, or are there upfront fees as well?

A The average residential agent sells homes at £100,000 to £400,000, but we deal with businesses with values from £5,000 to £10 million. You can’t apply the same rate across such a wide spectrum. A house is a house is a house, but every business is unique, so the level of complexity is higher, too. So the commission as a percentage of the sales price can vary from one per cent at the bottom end to four, five or even six per cent, depending on the complexity of the business and the amount of work the agent has to do.

Not everyone charges upfront fees, and you don’t need to charge them all the time. But where a business is very large and very complex, or has particularly high marketing needs for whatever reason, then an advance fee protects the agent. And an advance fee does sort out the dross, the businesses that really just aren’t going to sell, that aren’t really worth anything.


Q How do you go about the business of getting instructions? Is it similar to residential agency, in that you’re trying to get the individual business owner to use you rather than the competition?

A lot of the time it’s about individuals. You have to be interested in people and be able to get on with them, in the first place.

I won an instruction to sell a Spar supermarket when the owner’s Siamese cat came to sit on the settee next to me and curled up and went to sleep. Apparently it hadn’t done that with any of the other agents who called, so I got the job. I don’t care what I have to do to get instructions!

We’ve also done a good bit of work for banks – receiverships, especially care homes. Banks can be a good source of repeat business, if you give them a good service, so then you can have some regular work coming in.


Q What’s the mix of business? Has it changed signifi cantly over time?

A The mix of businesses being sold changes all the time. When I started, Post Offices were very much in demand. Buyers who haven’t run a business before wonder how they will earn money – they see the annual accounts, of course, but they don’t want to have to wait for a year, so the monthly salary paid by the Post Office is a big attraction. So is the fact that the Post Office guarantees there will be no competitive outlets nearby.

Post Offices are not selling at all at the moment; because of the closure programme that finished last year. There’s still good demand for freehold pubs. There are a lot of leaseholds on the market, but they’re not selling. I think the pub companies and brewers have hurt themselves by putting rents up to levels that are unsustainable and where the pub landlord can’t make any money.

There’s no incentive for the publican to develop the business because so much of the profit is going to someone else.

Right now, we’re seeing a huge increase in the number of pubs that are being sold for use as restaurants. I like to see that; some of them are wonderful buildings, and even a rural pub can be a success, if they can get the right chef. Incidentally, I hate seeing a pub sold with a covenant forbidding the sale of alcohol – I think that’s really wrong.

Changes in legislation can also have a major effect, as we’ve seen with post offices and care homes. Care homes were a very difficult market a couple of years back; the government was proposing to bring in minimum standards, and at the same time local councils were finding funding very difficult and trying to cut the fees they paid. The market is slowly coming back to normal, as the higher standards were never imposed in England, and in Wales the authorities are now being more flexible.

Newsagents have been through similar travails with the Monopolies and Mergers Commission, and that opened up the business so newsagents have lost that unique position in the High Street.


Q What are the problems facing buyers at the moment? Are there any types of business that you look at and just think, ‘no one’s going to buy that’?

A A big deal blocker at the moment is finance. The market at the moment is dominated by the difficulty in getting finance – one of the major banks has practically dismantled its business lending department. So that’s a big issue.

Some businesses are always difficult to sell. Jewellery shops, clothes shops, gift shops, toy shops. They’re good clean businesses, but the demand for them is very small. The stock level, compared to the property price, is high, and the stock level is something the banks won’t lend on.

A convenience store might have four or five weeks’ stock, for instance; the turnover is quite high. A fashion store might have six months’ stock, and it might be worth £60,000 while the property is just worth £10,000. That’s an impossible finance proposition.


Q How do business transfer agents enter the business? It’s not widely seen as a career option in the way that estate agency or surveying is.

A There aren’t that many of us. There are 150 members of ICBA, specialising in business transfer, compared to 10,000 or so in residential agency.

I came into the profession after I’d been working for a Housing Association on development projects and I was made redundant. The only way into the property business then was either work for a big corporate or set up as a franchise, as there was no training available – that has changed of course now.

Most people come into business transfer agency after experience in another field. Some people come from the property field, as I have done, others from an industrial or accountancy background. All these disciplines are useful for business transfer agents.


Q What makes you get out of bed in the morning – what is it that you really enjoy about being a business transfer agent?

A I’ve always found the business fascinating. You meet some interesting characters; you never know what you’re going to see next. It’s very varied – that’s the nature of the business. No two businesses are the same.

Owners sometimes find the process quite therapeutic. They open up to me in a way they wouldn’t do to anyone else – not their accountant, there’s often not time, and definitely not their bank. Over the course of my career I’ve learned that people are all different. I’m sure some people are quite happy in that process of selling another house, another house, and another house. I’m afraid I’d get bored with that.