Sellers should groom their pubs to achieve best value

Grooming a business should be an issue high on the agenda for licensees considering selling, says Devonshire Corporate Finance.

Marc Fecher, director at the finance company, says any operator thinking of selling their business needs to optimise the value and make sure the pub is looking at its most profitable.

He argues that there are a range of tips owner-managers should take into account when selling their pub.

He believes that buyers will look cautiously at a business where the up-and-coming management has not been tied into long-term incentives. It is imperative to attract and keep the right staff and be able to demonstrate this to a potential buyer.

He says that having a quality customer base is also important. A licensee should make sure that no single customer type accounts for more than 20 per cent of the pub's or pub company's income, and that customer loyalty needs to be able to be measured in years rather than in months.

All businesses need to have well-run and appropriate systems that ensure that client satisfaction is key. If a buyer needs to spend money sorting out this area it will be reflected in a lower offer price.

Mr Fecher argues that cash is more important than profit, and businesses must make sure they have effective credit control and cash management processes in place.

However, profit is still a strong indicator of future growth and he believes any new ventures should aim to be profitable within 18 months.

Good housekeeping is essential, he argues. Make sure that any employee contracts are sound and ensure all leases are in the right names, for example.

Mr Fecher said: "Planning to maximise the sale of your business is essential whatever your options. Bear in mind that what makes a business attractive to a prospective buyer is also a key to long-term success.

"It is vital to consider what needs to be done to optimise the value of your business. Remember that one of the main influences on the price buyers pay will be their confidence in the underlying profits they are acquiring.

"Buyers gain that confidence from demonstrable evidence and qualities within the business that attract high-quality staff and create more business from new and existing clients."