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Archive 2014 · Anyone Buy or sell their business?

  
 
swim_r
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p.1 #1 · p.1 #1 · Anyone Buy or sell their business?


Has anyone bought or sold a photography business before? I would be very interested in hearing your experience. Long story short I started a photo studio is 2007 with a good friend of mine and after several years I had to walk away to pursue a "real" job and to pay off my school debt. Fast forward to now, I am planning on a career change back to photography and my former business partner offered to sell me the wedding and portrait side if the studio as he has taken all if the commercial work with him to another company and he wants to just focus on commercial. We are great friends and I want to continue to be great friends after this deal goes through, so I am looking for anyone who has had a similar experience.


Apr 21, 2014 at 02:41 PM
Littleguy
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p.1 #2 · p.1 #2 · Anyone Buy or sell their business?


Two general approaches when buying a business:

1) Buy the assets
2) Buy the company

Buying assets is nice and clean – no liabilities or law suits to worry about from past clients / suppliers / staff / business partners of the old business. The old business closes up and you start a new business with the assets of the old company. You can use the old name but for legal purposes it is a new entity.

Buying the company – you keep the business running as a going concern. Sellers prefers this method as tax treatment is better – at least in Canada – don’t know the US tax treatment for this. But you are now responsible for all the legal liabilities of the old company – known or unknown at the time of purchase.

For a photography business – what is there to buy?
- Cameras / lenses and lights
- Real estate if any (leases or property owned by the business)
- Client lists / mailing lists of past clients (for weddings – kind of useless), for portraits, if he didn’t sell them files, they may come back for more print or products. But usually client lists are worthless for a wedding photography business
- Domain name / telephone number / e-mail addresses – if the business gets the bulk of the business from that domain, it could have great value.

In your case, since the old owner wants to continue the commercial side of the business, he may not be able to sell you the old company unless he sells you the old company and he starts a new company to service the commercial clients. Of course, who is going to own the trademark name for the business? Will he be using the old trademark name for his commercial business – how will the business name be split up between the consumer side vs the commercial side of the business?

Most people don’t purchase retail photography businesses as there isn’t much customer loyalty for photography these days. Only thing of real value would be the real estate for the studio space. Camera equipment depreciates fast, similar to most other business equipment.

I think it would be simpler if you started a new business and just paid him a set fee for every portrait / wedding referral he provides.



Apr 21, 2014 at 03:18 PM
accessmydata
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p.1 #3 · p.1 #3 · Anyone Buy or sell their business?


Thanks Littleguy!


Apr 21, 2014 at 04:13 PM
swim_r
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p.1 #4 · p.1 #4 · Anyone Buy or sell their business?


Thanks for the advice.

A few additional things to help clarify:

The current owner has already moved the commercial book of business to another company where he has teamed up with a video and web designer.

My interest in buying the business is mainly so I do not have to start completely over. I put a good 4 years of blood sweat and tears in to building this business and brand and would prefer not to start from scratch, but rather to add to what is already in place.

The valuation we are working on is based on assets + outstanding invoices = purchase price.

The value in this studio (besides a bit of nostalgia and the assets) comes from the website/domain/SEO, grandfathered marketing rates, the name/reputation, and being able to gain my prior portfolio back which stays with the studio.

Thanks again!



Apr 21, 2014 at 04:22 PM
rmric0
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p.1 #5 · p.1 #5 · Anyone Buy or sell their business?


Well, can we look back to when you left. You said that you were business partners, how was the business structured between the two of you? When you left was there a buyout?




Apr 22, 2014 at 08:56 AM
friscoron
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p.1 #6 · p.1 #6 · Anyone Buy or sell their business?


swim_r wrote:
The valuation we are working on is based on assets + outstanding invoices = purchase price.

The value in this studio (besides a bit of nostalgia and the assets) comes from the website/domain/SEO, grandfathered marketing rates, the name/reputation, and being able to gain my prior portfolio back which stays with the studio.

Thanks again!


This is a very fair valuation. In some company sales, the seller would want a piece of future sales as well, based on the brand they have built. This is the kind of deal that I think is win/win, and keeps your friendship.



Apr 22, 2014 at 02:54 PM
hendrikm
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p.1 #7 · p.1 #7 · Anyone Buy or sell their business?


It doesn´t work for a photography business.

You don´t want to tell the brides "Well, I didn´t take this pictures, but mine will be just as good..."

And word of moutj is always connected to a person (the photographer), not a company



Apr 22, 2014 at 04:40 PM





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