Selling a business and the value of the software


I was reading an article by one of my competitors.

As I understand it, the software that you sell, if it is up-to-date, is worth, with no data, the current buy price. Of course, this is a real problem for people on the DOS system since the buy price has dropped dramatically in the past few years, 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. The business brokers should address this point.

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 sell 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 affairs laws, federal and state, that deal with implied warranties. This means 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. This has happened, and the seller had to reimburse the buyer for the cost of fixing up the data by a computer consultant and the time of the buyer's accountant.

2) We also had a seller with an old software version. After selling his Newsagency, the buyer stated that 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 considering selling a Newsagency with a computer discuss these two points with the business agent and how they should approach it.