Industry sector: Retail and wholesale

Architectural salvage: Buy an existing business

You might decide to buy an existing architectural salvage business rather than start your own salvage yard from scratch. Buying a going concern can mean that:

  • the premises, business equipment and so on are already in place
  • there are established customers and an established reputation and business profile
  • the business can generate income immediately
  • there may be established suppliers - reliable sources of good quality items at reasonable prices. These could include overseas dealers
  • the business has a track record, which can help if you're looking for finance
  • staff may already be in place - these could include skilled craftsmen like restorers and conservators
  • there may be a business website in place
  • existing stock may be available to purchase along with the business - it can otherwise take quite a long time to build up enough good quality stock to attract customers to your outlet

However, look critically at any business that you are interested in to make sure that the price you negotiate with the seller is a fair one. Try to establish why the business is for sale - for example, is the owner keen to retire or is there another personal reason for selling up? Businesses like architectural salvage yards are popular with 'downshifters' - perhaps the current owner has decided that they made the wrong decision and wants to change career again.

Your market research into the sector as a whole and the locality in particular will help you to establish whether or not the owner is selling because he or she can no longer generate enough income from the business. This may not necessarily deter you - many business people are confident that they can turn a failing business around. The important thing is to have established the current position so that the price you pay for the business is not too high.

Other matters to consider include:

  • the state of the premises and equipment and so on. Will you have to spend money refurbishing or replacing assets
  • the condition and value of any stock you are buying. Check this over carefully before agreeing a price. Bear in mind that it can be very difficult to put a price on unique items like architectural antiques - the adage 'they're only worth what people will pay for them' applies here
  • if you are paying for goodwill, to what extent does this depend on the skills and personality of the seller and their personal list of contacts
  • is the existing owner prepared to give you some training after you take over, perhaps including introductions to key contacts like regular suppliers and important clients
  • existing staff rights
  • how to retain key personnel once you've taken over
  • does the business owe money that you'll be responsible for

If you are paying a large amount for stock - particularly valuable single items - then it may be worthwhile establishing that the seller holds undisputed title to them and that they were acquired legitimately. Also check that valuations are accurate and up to date. A well run business should keep the necessary paperwork to prove this.

Ask your accountant to look critically at the business accounts for the past three years and discuss with him or her the selling price in the light of what the accounts reveal. Make sure you budget for other professional fees such as legal fees and valuation and survey costs.