STOCK TAKING

Virtually every business transfer transaction will include a payment to the seller for SAV stock at valuation.

It is important that as a business buyer you are aware, at the beginning of negotiations, of an approximate value of the stock in trade held by the business you are proposing to purchase, as this could sometimes amount to a substantial amount of money on top of the purchase price, rent deposit and fees you may have to pay in your purchase. The stock value is particularly significant in retail, wholesale, licensed and manufacturing businesses.

It is equally, perhaps even more, important that an accurate valuation of the stock is calculated at completion of the transaction for the benefit of both the seller and the buyer. This very important stock valuation is best achieved by appointing an independent, impartial professional stock-taker/valuer, this will save time, guarantee accuracy and avoid any possibility of disputes. The cost of the valuers service, which is usually related to the stock value, with a minimum fee, is paid jointly [normally on a 50/50 basis] by the seller and buyer. To ensure that the transfer of the business and the stock valuation proceed smoothly we would suggest the following:

• Make sure that the stock valuation is carried on the same day as completion of the sale/purchase. This avoids any necessity for further accounting for stock that has been sold or fresh stock that has been delivered.
• We would suggest that you are present at the beginning of the valuation, and it is important you are there at the end, as you will be required to sign the legal document(s) to finalise the transaction. Although your presence is not required during the valuation you are, usually free to remain.
• Advise all wholesalers, particularly newspaper wholesalers and other suppliers you are ceasing or continuing to use, of the takeover and the date.
• If you are selling the business make sure all un-saleable and 'Out of Date' stock is removed from your shelves. In the case of those goods which are, 'Sale or Return', 'Sale or Exchange,' 3rd Party Goods which are not in the ownership of the business, and/or 'On Consignment' [ie only paid for as and when they are sold], it is essential these items are clearly and specifically drawn to the valuers attention. The valuer in attendance on the day will attempt to ensure, that the above issues have been taken into account, however it is not his final responsibility in terms of the Valuation.
• It is also important that the valuer is aware of all stock that is included in the transaction i.e. anything that is held in store rooms, lock-ups etc. or any stock that is specifically excluded from the sale.
• Remember that the Valuer is a professional dont try and tell them what is over-priced or how to discount, etc. This is what you are paying them to do and their decision is final.

We are able to recommend a number of qualified and accredited stock takers/valuers please contact us for further details.

T: 01702 551334 or E: enquiries@bradleyscountrywide.co.uk