Selling your Hairdressing Business

If you want to sell your beauty or hairdressing business you will want to get the best possible price. Our handy guide answers the most common questions business owners have.

The reasons for wanting to sell can be many – These include retirement sales, disposals by larger firms and sales by entrepreneurs wishing to embark on fresh challenges.

couple holding hands

Is it time to sell?

Valuations

Generally agents value businesses at whichever is higher of 3 times the annual profit available to an owner working full time or 6 times the annual profit available to an owner who delegated everything. Stock is valued at cost, equipment at depreciated value and both are added to the guide price. Freehold property is valued and offered for sale or lease.

How long does it take to sell?

Sometimes sales complete within 3 months but we would suggest allowing 6 to 18 months to find a suitable buyer and conclude a deal. The buyers who are active in the market change every few months. Recent buyers are busy integrating their acquisitions. Future buyers may be busy generating the funds that will allow them to buy a business in a few months time. Taking longer over the sale gives a much better chance of securing a good deal.

What accounts and figures do you need to market a business? +

provide monthly figures of the main revenues and costs

provide monthly figures of the main revenues and costs

Enquirers often ask to see accounts for businesses they are interested in. They would typically ask to see the monthly figures of the main revenues and costs for the last 36 months of trading up to last month. An excel spreadsheet would be ideal.

If you have listed your business for sale a while ago, you should consider having them updated on a monthly or quarterly basis. Annual accounts in electronic format are also of interest but these are usually much less up to date and less informative.

Meetings with buyers?

Seriously interested enquirers will usually want either a detailed telephone discussion or a face-to-face meeting with the seller. The purpose of such meetings is to allow the potential buyer to understand the business in depth. If you use an agent, they will not attend such meetings but to prevent any possible misunderstanding do give a report to your agent afterwards.

Do you think your business is impossible to sell?

As long as a business has turnover and either profit or potential for profit then it should be saleable. The most common type of buyer is 10 times bigger than the business they buy. They use retained profits to fund the purchase and do not rely on bank borrowings. They are very good at marketing, cost control and new technology and are usually well placed to produce higher profits from the business they buy than the seller was able to achieve on their own. Generally their motivation in buying a business is the challenge of getting to grips with a different business and trying to build it up even further.

How do you make the business more saleable?

It’s possible to do but only if you do it over a long period. The last 12 month period is the most important but buyers will look carefully at the last 36 months of trading. Nothing you do in the few months before sale is going to make any difference to the value of the business. In an ideal world you would spend three years experimenting with the business to find the best way of doing things then spend another three years keeping things very steady with no chopping and changing prior to attempting to sell the business.

There are many agents who will market your business. If possible find an agent that specialises in Beauty and Hairdressing (example Beauty Mergers), or at the very least one that deals with retail businesses on a regular basis and has a proven track record. Some agents charge a lot of money up front so be careful who and how you sign up. A commision on the final sale is often preferred.