Whether you're interested in the smaller business community, are planning to start a business or have an existing business, we have a package for you.
Our most popular package is FSB Business Essentials which includes a whole range of benefits and products designed to make your business fly
A suite of legal benefits including a dedicated helpline, bundled insurance products and a range of online information to keep your business safe. Plus a whole range of negotiated benefits to help save you money and win business.
Our Business Creation package is designed to make starting a business simpler, allowing you time to focus on what's important - making it a success.
Specialist company formation benefits, access to FSB networking, business banking and a range of products to help get you setup in business.
Joining FSB Connect is free and is a great way to be part of the FSB Community and have your voice heard.
You'll be able to access specialist networking events with like-minded members of the community and have your say in our Big Voice survey panel.
Whatever your circumstances, we have a package to suit you and your business. Click the button below to see which benefits are included in each package and start your FSB journey.
'Within a few weeks of joining we'd taken advantage of FSB’s Online Legal Documents. We started a graduate programme and access to these documents gave us an understanding of the legal side, and has helped us to create a number of processes and procedures.'
'When we first took on a member of staff, we used the online legal document template library. FSB does more important stuff than you think it does, there are lots of member benefits, probably more than we actually use.'
'Having somebody like FSB behind you is fantastic. There is a whole team behind the organisations, whatever is required: support, advice, finance, you know that you’re not alone, you’ve got FSB.'
We represent a diverse range of businesses from retailers to marketing agencies and just about everything in between. Take a look at more member stories and see how we could help your business fly.
More Member Stories
We offer three packages to suit your business needs. Joining FSB Connect is free, our Business Essentials package starts at £172.50 in the first year and our specialist Business Creation package has an introductory price of £99 in the first year.
“There are many moving parts involved” when structuring the sale of a business, says Dan Barrett, director of corporate debt advisory at boutique corporate finance firm CreditSquare.
“Typically, a deal is composed of equity, debt and, sometimes, vendor finance. The level of debt that can be put into a transaction is dictated by the business’s ability to service and repay a loan, which means that it needs to generate cash flows that exceed the interest and principal repayments.
“In addition, lenders generally want some security for their loan. As such, the debt quantum is also dictated by the level and quality of assets on a business balance sheet.”
In an asset sale, the buyer and seller must agree on which assets to transfer, including tangible assets like property, equipment and stock and intangibles such as copyrights, accounts receivable and contractual agreements.
Less complicated than the alternative (see below), an asset sale offers the buyer a simpler structure and sale and purchase agreement and generally fewer transaction costs.
A share sale, on the other hand, is the ‘lock, stock and barrel’ option: everything – all assets and liabilities – are transferred to the new owner.
Requiring a more comprehensive due diligence process, it means the seller should be particularly fastidious in preparing for the sale.
Sale and purchase agreements tend to be more detailed too and the buyer is more likely to seek protection in the form of warranties (more on those in a moment).
There are advantages to the seller though: the transfer of title is simpler and share sales are generally friendlier in terms of tax liabilities.
Warranties are a contractual promise that information provided about the business or its assets is true. The buyer will seek to extract warranties from the vendor on things like accounts, contracts, tax and legal requirements.
Protecting the buyer, a warranty leaves you with an ongoing liability to the purchaser after the sale has gone through.
Warranties should be defined clearly and precisely to reduce scope for misinterpretation – lest the buyer ever seek to blame you for their own mishandling of the business.
Generally speaking, the more flexible you are in structuring a deal, the higher the price you can negotiate.
In an ideal world, of course, you’ll secure all finance up front, so you can more readily finance your next venture or retirement plans. But if you can afford to defer some of the agreed price, then you may get a better return in the long run.
“If there’s a gap between what the buyer is able to finance (debt and equity) and what the vendor is willing to sell the business for, it can be bridged by vendor financing.” Says Dan Barrett, whose firm specialises in debt solutions.
Also called owner or seller financing, this is where the seller plays the role of a bank and effectively takes an IOU from the buyer.
Documented in a loan note (or promissory or carry-back) note the terms are usually similar to bank loan terms: the buyer puts down a deposit and pays the rest, plus interest, in instalments, with the business serving as collateral.
“Vendor financing can be structured in several ways, and as equity or debt,” says Barrett, “but it’s normally a subordinated, interest-bearing loan provided by the seller to the buyer.”
Seller finance widens the pool of buyers who can afford your business, particularly when bank finance is scarce, as was the case during the credit crunch.
In the event that payments are missed, the buyer takes back control of the business. While such insurance is reassuring, it does put you back to square one, lumbered with the asset you thought you were rid of.
“As the terms of vendor loans typically favour the buyer,” says Barrett, “the purchaser wants to finance the deal as much as possible through vendor financing, whilst the vendor seeks the opposite. Also, deferred payments can protect the buyer’s position should there be a claim under the warranties or a tax problem.
“In summary, vendor finance can be a useful mechanism to bridge differences in the vendor’s and buyer’s expectations, so that a deal can be done,” continues Barrett.
“However, intrinsic to structuring vendor finance is a conflict between the interests of the buyer and seller, so one must carefully calculate the benefits and potential pitfalls of a transaction to make a commercial decision on how to best structure the deal.”
A seller may agree as part of the sale agreement to assist the buyer even after the paperwork is signed and the keys handed to the new owner.
For a fixed period agreed in advance, the seller will either be hired as an independent consultant or an employee – usually with no remuneration.
Depending on the business’s complexity, this transition period may vary wildly in length from anywhere between one week and six months.
The nature and scope of the seller’s role depends on the business and buyer’s circumstances, but may include training the incoming owner, introducing them to clients and suppliers or providing strategic advice.
The buyer is more likely to demand post-sale advice and training if they lack experience in the industry or running a business generally (and many purchasers are first-time buyers) or if the vendor’s charisma, expertise and contacts are central to day-to-day operations and client management.
A BusinessesForSale.com survey revealed just how much buyers appreciate this kind of post-sale consultancy.
Asked how much more attractive a business for sale would be if its owner were available for advice and training after the sale, buyers responded in the following proportions:
• Much more attractive 55%
• Slightly more attractive 32%
• Would make no difference 11%
• Less attractive 2%
It’s imperative that both parties agree in advance the nature, scope and limits of the previous proprietor’s new, downgraded role – especially given their probable emotional attachment to the business.
Dan Barrett, whose firm also advises clients on financing growth, refinancing incumbent debt or financing M&A activity, says: “Where the vendor stays involved in the business on behalf of, or together with the buyer, an earn-out deal can work for both sides.”
In “an earn-out deal,” continues Barrett, “the vendor receives additional payment according to the performance of the company after the transaction. This assures that the vendor’s interests are aligned with the performance of the business, but at the same time gives the seller reassurance that he will get any or all or his earn-out.”
For example, the buyer might agree to pay £500,000 up front and a further £500,000 over five years if certain sales- or profit-based milestones are hit. If the targets be missed, then no extra cash is due and the initial £500,000 payment stands as the final sale price.
Earn-outs are typically repaid over 3-5 years, but the repayment period can be as brief as a few months.
The attraction to buyers – and the reason they’ll often pay a higher price – is obvious: they needn’t find as much cash up-front, they’re protected if the business fails to meets expectations and they’ll be reassured by the seller’s apparent confidence in the business’s ongoing success.
Sellers, meanwhile, can enjoy a share of the spoils should the business perform strongly under new ownership. This is especially gratifying if their success is at least partly attributable to the previous incumbent’s efforts.
On the downside, earn-outs introduce risk and complexity to the deal and deprive you of a clean break from the business.
In most businesses sales the buyer will demand that the seller sign a non-compete agreement, which prohibits sellers from competing directly with their former business for a certain period after the business is sold.
The agreement will clearly define the products or services that are off limits within a certain geographical radius.
Most non-compete agreements last for three to five years.
The agreement may also include a non-solicitation clause barring the outgoing owner from poaching the company’s employees or customers.
FSB Financial Healthcheck has been providing unbiased, independent sound advice on personal and corporate finance for over 20 years.
National Federation of Self Employed & Small Businesses LimitedSir Frank Whittle Way / Blackpool / FY4 2FE. National Federation of Self Employed & Small Businesses Limited (FSB) is registered in England, number 1263540