New entrants add to turmoil in business transfer market Bolton-based Bag a Business goes under as professionals go online
By Michael Fahy, 16 February 2009
Bag a Business Ltd, which bought the remnants of failed business transfer agency SBS Commercial less than a year ago, has itself been placed into administration.
The company was formed in April 2008 by ex-SBS Commercial directors Martin Marshall, Rod Burney and Damian Hosty.
It agreed to pay £500,000 for the business and assets of SBS, which collapsed owing £1.5m, and arranged a repayment schedule with administrator Gary Bell which would have saved 44 jobs and led to creditors receiving up to 50p in the pound.
However, after around nine months of trading, the new company had already agreed at least one “payment holiday” on the amount owed. Bell was reappointed as administrator on Monday of last week.
“What was paid was a good price. But obviously, that's not the case if we don't end up with the money,” said Bell. “Quite a few other business transfer agencies have failed recently and I've had a look at what was paid for their books.”
Bell, an insolvency practitioner with Cowgill Holloway, is currently in talks with a number of interested parties about the sale of Bag a Business's main asset — the client book it acquired from SBS Commercial.
One potential acquiror could be Knightsbridge Group Holdings, which bought Bury-based Kings Business Transfer from the administrators of Aim-listed Dipford Group Plc in June last year.
Its main trading arm, Knightsbridge Business Sales Plc, posted a loss of £125,818 in the year to the end of May 2008 on flat sales of £4.3m. But it remains to be seen whether Bell can achieve such an attractive price this time around, when the business transfer model is being chipped at by a number of new competitors.
Andrew Weaver, a director of North West Business Advisors, has set up a joint venture with Dow Schofield Watts known as Daresbury Company Sales LLP that allows business owners to create their own sales memorandum.
It charges a flat fee of around £500 for a one-off listing and will not levy the standard agency “success fee” of two to five per cent of a business's sale price.
For firms with a turnover of £1m-plus, some corporate financiers now offer free listings on websites in the hope that they may gain advisory fees if a transaction goes ahead.
Law firm Turner Parkinson started an online version of its Tpdeals listing service in November. Corporate partner Nick Davenport said the firm had sent a monthly brochure listing companies for sale to local corporate financiers for around eight years, but was asked to develop an online version by insolvency contacts who needed to find buyers instantly.
“The market is tough and the more activity we can generate, the more we all benefit,” he said.
Ben Marshall, general manager of Altrincham-based business transfer agency Harvey Silver Hodgkinson, said agencies remained attractive to business sellers for two reasons — their contacts and their experience. “We've been established for 30 years. People know our name and our boards,” he said.
The business was established by its owners Harvey Silver and Gary Hodgkinson in 1979. In the year to the end of September 2007 it had a turnover of £480,643.
“You can put your details onto some lawyer's website for nothing, but who would know it was there?” he said.
Crain's tried to contact Bag A Business at its offices on Lever Street in Bolton — a building which was leased to the company by Marshall — but calls and emails were not returned.
