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How to Sell a Deli

Discover how to prepare your deli for sale and reassure buyers about the transition to new ownership.

Decided to sell your delicatessen? From preparing your deli for sale to signing the sale agreement and the key stages in between, this guide covers the steps you must take to sell your business. Also includes advice on the merits of virtual data rooms, appointing a business broker and accepting a portion of the sale price in stages. This article will give you a grounding – but be sure to get appropriate legal advice to properly navigate the process of selling your business.

Selling a deli is very much like selling any other small retailer in terms of the fundamentals.

This includes the fact that finding a serious buyer is often the toughest obstacle to surmount. In a competitive food retail landscape, be sure to identify and champion your deli’s unique selling points.

Preparing your deli for sale

As small retailers, delicatessens are not among the most complex businesses to value and prepare for sale. Nevertheless, while some sellers oversee the process themselves, avoiding the fees charged by a business broker might prove to be a false economy.

From deciding to sell your business to handing over the keys, it’s likely to take at least six months (and can take much longer) – during which time you’ll still need to run the business. If, like most deli owners, you’re hands-on, manning the shop six or even seven days a week, managing the sales process concurrently could be rather disruptive (and disrupted).

Carefully prepare your business for sale with the help of a suitably qualified solicitor and/or business broker, preferably with experience in retail, to enhance your chances of a satisfactory outcome.

View your business from the buyer’s perspective: what might put you off and what steps can you take to remedy any shortcomings?

But also weigh the benefits of doing so against the financial and time costs. For example, a top-to-bottom refurbishment might cost more than any increase in sale price you might realistically achieve. After all, many buyers want to revamp premises according to their own blueprint.

Nevertheless, first impressions do matter and a few inexpensive cosmetic changes – like a deep clean or fresh coat of paint – can be cost-effective in enhancing ‘kerb appeal’.

Your solicitor or business broker can help you prepare documentation around asset valuations, liabilities and debts, staff contracts and financial forecasts.

They might even help you upload paperwork to a virtual data room, where the buyer can access paperwork as and when they need it (and when it’s appropriate to disclose confidential information). This negates the risk of physical documents being lost, either in your possession or in transit.

Your paperwork could include a document outlining all processes involved in running the business day to day – from ordering produce to using the cash register and locking up the premises at the end of the day. This can assuage anxieties the buyer might have about the transition to new ownership.

Business valuation

Value your deli with the help of an independent business valuation expert, preferably with experience of valuing food retailers or at least retailers generally.

It’s unwise to value the business yourself since you’ll probably lack expertise and objectivity (sellers often overvalue, but rarely undervalue, their businesses).

Delis and other food retailers are usually valued according to a multiple of profits. The valuer will also factor in the value of the lease or freehold and all fixtures and fittings. Two great intangibles might influence the recommended asking price too: current reputation and ‘potential’ (a prime location and ‘underused’ space are two common justifications).

Going to market

If you decide to advertise your business online, your advert should highlight your deli’s major selling points. This might, for instance, include: 

  • High street location in affluent area
  • Strong reputation for customer service (so buyers will inherit a great team)
  • Longstanding relationship with industry-leading suppliers and product range unrivalled in local area
  • Recently renovated, stylish interior
  • Some delis double as cafes – sometimes with room to add more seating
  • Strong Google My Business rating and effective social media operation

Buyers can also be found through your solicitor or business broker and from among employees or industry contacts.

Negotiations and legalitiesSell Your Business

When you’ve found a seemingly credible buyer, you need to negotiate the price and terms of sale. There are three tools at your disposal for reassuring the seller about their ability to thrive – and thus persuading them to meet your asking price:

  • Train your team to take on your responsibilities and gradually disengage from the business – thereby reassuring the incoming owner that the business can prosper without you
  • Accepting some of the payment in instalments (known as seller financing)
  • Agreeing to work in the shop for a limited period post-sale to help the new owner settle in

Agreed terms will be set out in non-binding ‘heads of terms’. Once the buyer has conducted due diligence (an exhaustive investigation of your business) your solicitor can then draft the final – this time-binding – sale agreement.

Sale agreement

Based on the heads of terms, the sale (or purchase) agreement will be more detailed and incorporate any warranties and indemnities agreed with the buyer. Your solicitor can help you review warranties and finalise the agreement.

If your premises are leasehold, seek consent as early as possible from landlords or banks for transfer of the business lease and related property and equipment leases. 

Once the agreement is signed by both parties, the business legally changes hands and the buyer is legally committed to convey funds according to the agreed schedule.

For more information, you should read our in-depth guide to selling a business.