Monday 27 February 2012

More stories from the Mirror

After a brief absence, it's time to welcome back RTA "business sales specialists".

We revealed last summer how the firm's manager Ceri Edwards admitted its contracts were "draconian" and "heavily weighted in RTA's favour".

Previously we've told of clients whose businesses were not sold but RTA still demanded huge fees. Now Manchester pizza shop owner Hiwa Ali is celebrating after being sued by RTA when he refused to pay £3,000 plus VAT on top of his £117.50 upfront fee. After a brief absence, it's time to welcome back RTA "business sales specialists". We revealed last summer how the firm's manager Ceri Edwards admitted its contracts were "draconian" and "heavily weighted in RTA's favour".

Previously we've told of clients whose businesses were not sold but RTA still demanded huge fees. Now Manchester pizza shop owner Hiwa Ali is celebrating after being sued by RTA when he refused to pay £3,000 plus VAT on top of his £117.50 upfront fee.

The firm wrote to him saying: "The agreement was to remain in force until revoked in writing by registered or recorded delivery and at no time have you sought to withdraw our instructions and therefore the agreement remained in force. "We attempted to make arrangements for a party to view only to be informed that a sale of the business has now taken place."

 But Mr Ali became fed up with Stockport-based RTA precisely because no one had come to view his shop, blaming the firm for valuing it at £48,500 when he suggested £36,000 was nearer the market price.

 With the help of a friend, Mr Ali, who has poor English, launched a counterclaim for £5,000, saying "it must have been obvious" to RTA's sales rep that he did not understand what he was signing.

 His friend pleaded: "Four and a half months after signing the contract, Mr Ali was in dire financial straits but there had not been a single viewing or offer for City Pizza. "Since RTA did not sell the shop, the defence submits Mr Ali does not owe RTA £3,000."

Result: RTA's claim, and Mr Ali's counterclaim, were both thrown out.


Andrew Penman of The Mirror

http://blogs.mirror.co.uk/investigations/2012/02/and-welcome-back-to-the-column.html

Wednesday 8 February 2012

Meet the team


Bit odd that the 'client testimonial' was from a buyer and not a seller....

To what extent is the number of businesses on an agent's books a reliable indicator of their reputation?

Here's an interesting question I found on the BusinessTransferAgents.co.uk website today.

"To what extent is the number of businesses on an agent's books a reliable indicator of their reputation?"

Interesting isn't it?

So, if I Sell Em Quick Limited has 250 businesses on it's books and Sold Within 48 Hours Limited has 2,500 businesses on it's books, would you assume Sold Within 48 Hours Limited to be the better agent?

Here's what some of the UK's leading Business Transfer Agents had to say about it:-

"It's not the number of listings an agent has that's important; it's his track record on the number of businesses he's sold.
"You could have an agent with 100 listings but who's sold 90 of them. Or you could have an agent with 1,000 listings but has only made 100 sales.
"It's not the volume of listings, it's the back-up service they're able to provide.

"If an agent has 7,000 businesses on their books, how many days are they actually devoting to each client? That works out at about 10-15 minutes dedicated to each client every year, and if they have a sale going through they won't be devoting any time.
"It's always an issue with agents: they want enough businesses to sell to give the buyer choice, but eventually the workload can become too much so they have to start employing people to deal with it."

"The advantage of having a lot of listings is that it tends to attract a lot of traffic, so it's like the circulation of a newspaper: if it has a lot of readers it improves the business' exposure and I think that makes a big difference. It also means the agent has the financial strength to advertise more widely and expose the business to the widest audience."

"In my opinion the more listings a business broker has can often mean the less they care about individual owners and selling their business. Some large business brokers only sell a small percentage of the businesses they list, and it can be the case that one 'negotiator' is handling the sale of 100 or more businesses!
"On the other hand, some one-man band operators offer a very poor quality of service.
"The number of listings has nothing to do with how effective an agent will be in selling a business and should not be a consideration for a business owner looking for an agent."

"You can look at it both ways. Some agents have pages and pages of listings, which looks impressive, but how many do they actually sell?
"Conversely, it can look like you're a big player in the market if you have lots of listings. For anyone looking for an agent, it's not the number of listings they have, but comparables on what they've sold recently.
"If I came across an agent with thousands of businesses I'd think I'm just another number to them. How much attention are they going to pay me?
"If you go with an agent with a manageable number of listings, you'll have some personal attention – which is what vendors like."

You can see the full details here

Some interesting points.

"..the more listings a business broker has can often mean the less they care about individual owners and selling their business.."

"If an agent has 7,000 businesses on their books, how many days are they actually devoting to each client?"

"The number of listings has nothing to do with how effective an agent will be in selling a business"

So, just because an agent has lots of businesses on its books, doesn't necessarily mean that they are good at selling.  But we already knew this, didn't we?  Learnt the hard way.

You might be interested in Ceri Edward's "7 tips if you are thinking of selling your business".  In view of the comments above, point 5 should be expanded...

E)  Find out how many businesses your agent sold in the last 12 months compared to how many businesses the took on




RTA vs Guy Davies ~ update


RTA vs Guy Davies - Judgement transcript now available


For those of you who were looking for the details of the Judgement of the appeal hearing in the case of RTA vs Guy Davies (11th January 2012), the transcript  is now available in the CEBTA Members Area here - just follow the link.

You'll also find an update with regards to Guy's appeal of this decision.

"Consumer Law" ~ statements from RTA

A number of defendants and clients have received a notification from RTA entitled "Consumer Law" which provides some brief information about the above case.

In this document, RTA make the following statement
"...any future case where the defence is "I am a consumer" will be dismissed and judgement will be awarded to RTA"

This statement is misleading as a number of you have asserted from this that this 'dismissal' is automatically done by the court and that you will automatically get a Judgement in default.

This is not the case...

In almost all of your cases (for those of you who are in the middle of court proceedings) you have not just used the "I am a consumer" argument as you have many other issues - so this will not apply to you.

However, the court can make any decision it sees fit without a hearing.  Not just about this decision but about anything at all, as defined in the Civil Procedure Rules, etc.  But, in order for any defence to be dismissed it would be usual for the claimant to make an application to the court to do this.  The court would then make a decision but it's important to remember that the overriding objective of the court is to be fair to both parties.  So it's highly unlikely that your defence would be automatically dismissed or that you will  automatically get a judgement in default.

But if you are worried about this then contact the CEBTA people who will help you make an application to the court to amend your defence - it's as simple as that!


You might like to email this "Consumer Law" document to Jayne Stubbs at Stockport Trading Standards along with your views on whether or not you thought it was misleading, and a summary of your story.

When is a Landmark Case not a Landmark Case?

It is interesting to note that RTA refer to this as a 'landmark case'.  This author is wondering why RTA failed to recognise the case of RTA vs Gill Draper (which was also a decision made in a Higher Court) as a landmark case....

After receiving the decision in the Appeals Court of Judge De Mille in the case of RTA vs Draper where Judge De Mille agreed that the client was a consumer under these circumstances, RTA still argued that this wasn't the case.

In any case the decision of Judge Rundell in RTA vs Guy Davies is currently being appealed and you should inform your judge of this fact in your hearings.

Guy will keep us informed of progress.






Wednesday 1 February 2012

I want to sell my business ~ what should I do?

There are plenty of business transfer agents (or business brokers) out there who are not just in it for the upfront fee or withdrawal fee.  In fact, most business transfer agents are as keen to sell your business as you are.

So what should you do?

Many Business Brokers are members of the Federation of Business Brokers.  Take a look at the FBB website for details of their members.

Also, try the Business Transfer Agents website.

Is the broker asking for an upfront fee?


If the Broker wants an upfront fee, ask what it's for.

If it's an advance payment for advertising, well that's fair enough, isn't it?  The quicker your business goes on the market then the more prodpective buyers get to see it.  And a £500 contribution towards advertising should be more than enough to cover advertising costs for at least the first 12 months.

If it's not entirely clear what you're paying for then perhaps you ought not to be paying it!

Some Brokers want an upfront fee "to show you are commited to selling your business".  Errr, really?!?  You want to pay big bucks to show YOUR commitment?!?  In the cold light of day, away from the super-salesman speak, it doesn't make sense, does it?  But you'd be surprised by how many people fall for it...err, I mean, show their commitment in this way.

Is the broker asking for a withdrawal fee?


Well, if you didn't pay an amount for advertising at the beginning of the contract then it's probably fair that you might need to contribute to advertising costs when you terminate the contract.  Consider what those costs might have been during the period of the contract though - is the withdrawal fee extravagant compared to what the broker actually paid in advertising costs.

Most medium sized brokers with at least 100 businesses on their books will be paying a few pounds per month to advertise on the Daltons Weekly and the same again on businessesforsale.com.  If they have their own website then they have the costs in running that too.  And, obviously, there will be costs in managing your account internally.  Most Brokers don't advertise in printed media anymore - there's not many people who don't use the internet these days.

When does the broker get paid?

Here's the deal, in my view at least.  The broker should be paid if they find you a buyer and the business is sold.  Not hard to understand is it?

So, if you use more than one agent (which, as they all advertise in the same places would, in my view, be a waste of effort) then you might expect to pay a bigger commission to the 'winning' agent.

If you're on a 'sole selling' agreement then you can only use one agent.

What does the contract says will happen if you sell the business yourself, close it, or decide not to sell?

Well your broker has spent all that money advertising your business, it's only fair that he should be re-imbursed.  So pay him for his advertising.

No, not the £22,000 he's claiming in 'lost opportunity'....just the advertising costs.

In summary, aim for the following contract

1. Pay an upfront fee if it is for advertising.  Make sure it says in the contract that it is for advertising - if you're not sure that it does then get the agent to write it on the contract and both of you initial it.  Aim for no more than £500.

2. Pay a withdrawal fee if you didn't pay an upfront fee, and certainly not more than £500 for each year you've been with your broker.

3. Pay commission ~ when the business sells ~ to the broker who found the buyer.

If the business closes, you decide not to sell, you sell to a buyer that the broker didn't find ~ expect to pay for any advertising the broker did.

And, most importantly, if you agree terms with your broker or your broker tells you what they are going to do, make sure that's what it says in the contract.  If it's a boring and long contract then make a few notes on the back of the contract, sign and date it and get your broker to do the same.  Write PTO on the front of the contract.

If your broker won't do this.....start to wonder why.....