Business transfer agents: Time to crack down on rogue operators who demand money for nothing
Hit by the recession or maybe just retiring or moving on, there are countless owners of small businesses who’d like to sell up.
Business transfer agents are supposedly there to help them find a buyer.
But today I lift the lid on a string of them who demand huge fees even when they fail to get a sale, and then sue clients who refuse to pay up.
Rip-off 1: Judge backs family over firm’s ‘one-sided’ contract
Verdicts on business transfer agents don’t often come much more damning than this.
The case involves one of the most notorious firms in this field, RTA Business Consultants.
It failed to find a buyer for a family-run car parts firm but still demanded payment.
When the owner, 70-year-old Andrew Rothery, refused to cough up, RTA sued.
And lost spectacularly.
Its rep Jen Leary bragged she could value a business “to the penny” but got the price of Mr Rothery’s firm wrong by £700,000, Halifax County Court was told.
She lied that she could sell West Yorks firm Holmfield Auto Spares for £1.3m and persuaded Mr Rothery to sign a contract to pay £5,000 plus VAT for marketing, followed by commission on sale.
Suspicious of the high price put on his firm, Mr Rothery had two reputable business sales agents value it and they came up with a figure of £600,000.
So he refused to pay RTA, which sued him for £10,000 in supposed unpaid fees and lost commission.
Deputy District Judge Keith Nightingale threw out the case and was scathing about RTA’s terms.
He said: “The contract, it seems to the court, has clauses which are wholly one-sided and quite frankly it is a document that does not seem fair or balanced whatsoever.”
Mr Rothery and his son Gavin were delighted.
“It was the ignorant bad-mannered attitude of the people at RTA which made me determined not to give them money when they had not earned it,” he told me after the case.
“I’ve been in business for 42 years and have dealt with lots of people who want to take money for doing very little.
“RTA is one of them.”
And Mr Rothery is not the only one to think so.
An extraordinary insight to RTA came at an employment tribunal this month.
Former senior salesman Howard Rowlands told the hearing that the boss, Paul O’Reilly, threatened to “punch him in the f***ing face” in a row over the firm’s ethics.
Mr Rowlands said Mr O’Reilly was “ranting and raving”.
He said: “I spun around and left the office as quickly as possible, I just wanted to get out of there. I felt threatened, seriously threatened.”
Mr Rowlands also told the tribunal in Manchester that sales director Paul Mitchell explained how they would make money from a typical business seller, revealing: “We want to stitch him up with the withdrawal fee.”
Mr Rowlands said: “I didn’t do fraudulent contracts, that’s what caused the animosity. I questioned the ethos and morality.”
He explained that clients were unwittingly committing themselves to paying £1,500 even if no sale of their business was achieved.
He said: “The withdrawal fee is on that contract for life, with instructions from Paul Mitchell and Paul O’Reilly not to inform people it’s there for life.
“I raised it at sales meetings, that it was abhorrent. The withdrawal fee is like an anchor. If owners sell it themselves, RTA wants £1,500. If they take it off the market, RTA wants £1,500.”
RTA disputed the account of its former sales star, saying it was made up because Mr Rowlands was facing disciplinary action over alleged racist language.
Mr O’Reilly also claimed that the Mirror had been ordered by the Press Complaints Commission to print a retraction for one of my previous stories about his company.
He was asked to produce this retraction, forcing him to admit: “I don’t have a copy of it.”
That’s because it doesn’t exist.
The tribunal ruling was postponed.
