A revision when a business is sold or a partner leaves

When a shop or warehouse is being sold, when a partner leaves the business or when two co-owners redistribute their shares, the most arguments arise around the stock balance. The seller says "there is a large sum of goods in the warehouse", and the buyer replies "that is not how it looked to me". If the figure in the books is approximate, the price agreement is approximate too. That is why in such situations a neutral revision, agreed in advance by both sides, is carried out.

Why this is a separate revision

Unlike an ordinary annual count, the interests of the sides here are opposed: the seller wants the balance to be larger, the buyer smaller. So it is better for both sides to do the count together, or for a third party they both trust, such as an independent team, to do it. The date is also fixed strictly: the balance must be "frozen" on exactly that day, and later trading is recorded separately.

A count proves only the real presence and condition of goods and equipment. The other sides of the deal, namely debts, obligations and title to property, are usually checked separately by an accountant and a lawyer. Do not let a warehouse revision stand in for them.

What to agree in advance

Before the count, set down in writing:

• the date and time of the count and how trading is handled from that moment (suspended, or issues recorded separately);
• who counts and who observes;
• how the goods are valued: at cost, at purchase price or at the current market price;
• how damaged, expired and slow-moving goods are treated;
• how goods taken on commission or in custody are set apart;
• how disputed items are resolved;
• who pays the costs of the count.

These points also touch on the legal side, so show the text of the agreement to a lawyer.

What is counted

Besides the stock of goods, fixed assets (racks, refrigerators, till and computer equipment), goods in transit and goods handed to others are recorded. Goods that belong to somebody else, for example items taken on commission, go on a separate list and are not added to the value. If third-party goods end up in the stock being valued, the price is inflated artificially and a dispute follows. Each entry can be backed by a photograph.

Three categories for valuation

A practical method: divide the goods into three categories.

1. Good, fast-selling goods. They are valued at full value.
2. Slow-moving or outdated goods. They are valued at a discount.
3. Unfit or expired goods. They are left out of the value or priced under a separate agreement.

It is important to agree the boundaries of the categories and the size of the discount before the count, otherwise every item becomes an argument during valuation. For example, items that have not moved for six months could go into the second category.

Documentation

A report is drawn up on the result of the count: both sides and the committee sign it, and the reconciliation sheet and count sheets are attached. Disputed items stay on a separate list. The sum in the contract rests on this report. Record receipts and issues between the count date and the signing of the deal in a separate table: it is added to or deducted from the final sum as an adjustment.

Give staff a short, open explanation too: if they are told why the count is held and what is expected of them, rumours do not spread and work goes calmly.

A hypothetical example: two partners run a shop and one wants to sell his share and leave. They agree the date of the count, and one representative from each side and an independent accountant do the counting. The goods are divided into three categories, and 12 items taken on commission go on a separate list. In the report the good goods are valued at full value and the slow-moving ones at a discount. As a result both sides reach the price on the same basis and no dispute follows.

Conclusion

When a business is sold or a partner leaves, a revision gives a reliable figure and spares the sides needless disputes. Agree the date, valuation method, participants and the handling of disputed items in writing beforehand, and fix the result in a report. If you need a neutral count that both sides trust, the Reviziya team can organise it and help prepare the documents.