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Newsagency Purchase Costs

It’s important to understand the overall costs of purchasing a news or lottery agency up-front, so you can determine your affordability, and then concentrate on businesses that suit your intentions & budget. Our exclusive business profiles include a Purchase Budgeting Worksheet and we highly recommend using that worksheet to help determine your affordability.

In addition to the cost of the negotiated Goodwill + stock at wholesale value ex-gst, on an average size newsagency, buyers should budget for additional purchasing costs of approximately 10% to 15% of the value of the Goodwill or Asking Price of an average newsagency being purchased.

Everyone approaches things differently, however some of these potential additional costs include such things as :-

  • government stamp/transfer duty
  • buying entity establishment (Pty Ltd, Trust etc if none exists)
  • legal attendance to contract advice & accounting due diligence fees
  • financier loan application costs (if applicable)
  • some supplier application costs
  • some supplier bonds
  • share of professional external stocktake
  • working capital, till floats etc
  • training fees

Rental & lease bonds are subject to individual landlord requirements, and will be separate to this “ballpark” budget.

FUNDING AFFORDABILITY

Whilst we can not provide financial advice, and individual circumstances will influence purchase funding affordability, the below is what we have commonly seen in the current market.

Financiers will :-

  • look at what cash and clear equity you are bringing to the purchase
  • loan up to 80% against your home on a current conservative valuation (less any existing mortgage outstanding)
  • loan up to 80% against your investment residential property (less any existing mortgage outstanding)
  • loan up to 65-70% against commercial property
  • loan up to 50% against the business being purchased (some include stock, some will not include stock)
  • look at your prior work experiences that will comfort them on your ability to be successful as a retailer

As a “rule of thumb”, it is wise to have at least 30-50% of the total purchase cost in Cash or liquid equity.

Regards very small businesses, where no staff other than owners are involved, financiers may loan against your personal property, but will rarely lend/secure against those very small business purchases. You generally need Cash or available Line of Credit to buy these ones bargain opportunities.

We highly recommend talking to one of our recommended Specialist Finance Brokers, or your Newsagencies For Sale Business Broker regards your circumstances

Clients with a Confidentiality Agreement can contact us for a copy of  our exclusive detailed summary document ‘Costs & Contracts – A guide to potential additional purchasing costs’