Selling a business and the value of the software

http://www.towersystems.com.au/tower_blog/archives/2007/01/valuing_tech…

I was reading an article by one of my competitors which is above.

As I understand the software that you sell if it is up-to-date is worth with no data, the current buy price. Which is of course a real problem to people on the DOS system, since the buy price has dropped dramatically in the past few years. So resulting in some bad valuations for this item.

However the data the Newsagency has put into it should add to a value. Ten (10) years of data should be worth something. This point should be addressed by the business brokers.

Having said that in the real world say you sell a newsagency. At the sale time you will have to sign many documents. Some of these include a statement that what you are selling is in working order and fit to run a newsagency. If you think of it someone would be crazy to buy something as expensive as a newsagency without such documents. But even if they did miss it there are consumer affair laws federal and state that deal with implied warranties. What it means is that a sold newsagency carries with it a legal obligation that the items sold are in working order and that it can do the job! Now

1) If the data is *garbage* then it is fraud. The seller could find himself having to pay the cost of fixing the data up. This has happened and the seller had to reimburse the buyer the cost of fixing up the data by a computer consultant and the time of the buyer's accountant.

2) We have had too a seller that had an old version of the software. After the sale of his Newsagency, the buyer stated after talking to a few newsagent’s suppliers the software lacks functions that a reasonable person in a Newsagency should expect. To her it was not working. Armed with a few statements from these Newsagency suppliers she went off to a lawyer. The seller made a deal and paid for the upgrade from an old Newsagency system to the recent version.

I suggest anyone that is thinking of selling a Newsagency with a computer discuss with the business agent these two points and how they should approach it.