Plenty of newsagency businesses are changing hands. We think that is in part because the channel had a good Covid. Retail businesses in our industry are looking sweet, and there’s some cracking opportunities out there.
A common question we get asked is, “What should I ask for when I’m looking to buy a newsagency?”
The question itself shows how green a prospective buyer is when it comes to buying a business. My first piece of advice is to get your head around the newsagency business of today, so you know what you’re getting into. And, I do mean today. The newsagency of today and into the future is not the agency focussed business of the past.
Here’s a list of data we suggest prospective newsagency buyers request from the vendor or their representative:
- The accountant’s P&L for the last two years. Not a spreadsheet that’s been created for the purpose. You need the real P&L.
- A list of add-backs used to calculate the profit figure on which the asking price is based.
- Tax returns for the same two years. While not always appropriate given business structures, they can be used to cross-check the accountant’s P&L.
- Sales data reports from the POS software for the last two years. This is the key data to verify the income claim.
- Sales data reports from the lottery terminal to verify the income claim.
- BAS forms to confirm the data in the P&L.
- A list of all inventory in the business, including the purchase price and date last sold for each item. And copies of invoices that you can randomly select to verify.
- A copy of the shop lease.
- A copy of any leases that the vendor expects you to take on board.
- A list of all forward orders placed on behalf of the business.
- A list of all employees, including their name, hourly rate, nature of employment, start date, accrued leave, and accrued long service leave.
This is all basic information that any buyer should have access to in order to assess a business. A business for sale for which this information is not readily available is not, itself, ready for sale.
Once you have the information, analyse it yourself. You should not outsource your decision as to whether a business is a good business to buy or not.
