Business Investment Returns

Business investment, whether it involves owning the freehold or leasing the premises, are incorporated on this page. These are set out at the bottom of this section on a benchmark or range of return basis.

All preparatory information about these investments are contained within the RESEARCH STEPS section.

Businesses for sale at present can be located via Business Broker Listings on the web, or from magazines which are sold at most Newsagencies.

This list is not exhaustive but gives some idea of what is available.

Obviously this varies dramatically depending on the type of business being researched. We refer here only to small business. Whilst we can arrange to assess larger corporate type businesses, the prompt list below does not apply to such businesses.

To give a general idea of what to include on your checklist, we list some below. Once again the list is not exhaustive and needs to be added to for specific types of businesses.

Click here to view Business Investment Checklist
This gives an idea on what to look for when researching a business invesment and what questions to ask. It does not cover specific businesses such as Hotels, Caravan Parks etc.

Depending on the extent of the security & funds being borrowed for a business investment, a valuation may be required by the lender.

If this is the case then some lenders will insist on their panel Valuer being engaged. Therefore there is no point in engaging another Valuer for finance unless the purchaser has a reason to do so.

Be aware of the different "yields" between a valuation and a feasibility study. Unlike a valuation, a feasibility study incorporates entry & exit costs, forecast cash flow variations & one off outlays. It is intended to measure the impact of the future outlook taking into account the timeframes of the net cashflow etc.

In addition it reflects the impact of variable tax advantages and their impact on business investment returns. The resultant Internal Rate of Return (IRR) then ranks the investments. Or in turn a required rate can be set from other benchmark returns to calculate a value.

This result may be an investment value not necessarily a market value as assessed by Valuers. Their figure assumes 100% equity whereas a feasibility study valuation may include borrowings to give a return on the cash contribution made by the investor. This is the most important figure & is designed to forecast what happens to the investor’s bank account, not the often hypothetical assumption that there will be no gearing.

It often makes sense to gear if the return on funds invested in the business is higher than the costs of funds. If you borrow at 10% and earn 20% with the borrowed money, why not, if this is done sensibly.

All these variables can only be quantified by a feasibility study.

Click here to view Business Investment Feasibility Study Inputs

When considering a business investment, the security of tenure and the term of the lease can be very important.

If the property is leased it is important to understand the main provisions of the lease. Your solicitor will check this for you, but you should initially check that all the relevant points that impact on the income from the property are spelt out to you in simple plain English.

You can summarise this in your own words from the lease clause checklist below.

Click here to view Lease Checklist

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