net worth of yacht brokers

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macca499

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Was watching the youtube channel of a well known UK broker and decided to look up their website to scroll through their listings. Their companies house page was near the top of the search results so I clicked in for a nosy - as with almost any other well known brokerage I have looked at on companies house, they have next to nothing in terms of net worth which astounds me, considering the high value of new and brokerage boats to their name and would seem they are trading on very thin ice, this also follows on from the post about Sea Ventures a few weeks ago who seem to be very much in business following their recent phoenix. Even scrolling back a few years to better times and these brokerages still don't seem to show much in the way of net worth or profit. Curious what the deal is here as it seems to be industry wide.
 
Brokers do not own yachts that they sell in almost every case they are an intermediate between a vendor and purchaser, there is a minor risk in the transfer of funds between the purchaser and vendor when it passes through the brokers accounts. There is an exception where the broker may be working with a builder on a new yacht and or maybe part of the builders business when there should be very different arrangements detailing funds and ownership of partially completed boats but this is far away from the normal and majority of of brokerage sales of secondhand vessels. Brokers have very few assets so need very little capital.
 
Not surprising as there are so many different forms of brokers and dealers varying from one man bands to subsidiaries of substantial conglomerates. In the case of the latter the company accounts for the trading company may not show the true resources behind the business. However you are right to be wary if you are for example buying a new boat from a dealer where you are likely to pay substantial sums up front before the boat is delivered. Then you need to look behind the trading company and perhaps look for guarantees for your deposit etc.

Buying a used boat through brokerage is much less risky as all brokers operate "client" accounts which are secure. Your money whether buying or selling never goes into the trading account - and you can get evidence of this by asking for a copy of the deposit or payment.
 
Fr J Hackett said:
Brokers do not own yachts that they sell in almost every case they are an intermediate between a vendor and purchaser, there is a minor risk in the transfer of funds between the purchaser and vendor when it passes through the brokers accounts. There is an exception where the broker may be working with a builder on a new yacht and or maybe part of the builders business when there should be very different arrangements detailing funds and ownership of partially completed boats but this is far away from the normal and majority of of brokerage sales of secondhand vessels. Brokers have very few assets so need very little capital.
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I understand they don’t own them but even brokering a modest amount of their used stock list at 5-8% commission I would expect them to have more than >£10k to show for their efforts at year end
 
Accounts submitted to companies house often bear no relation to the truth. In the case of a broker, they might have a stocking loan (creditors due within a year). By the time they've taken all the salaries out, helped themselves to a divvy, then unless they were gearing up to sell the business, best to leave very little value in the company at the end of the year. Also puts off anyone intending to sue ;-)
 
macca499 said:
I understand they don’t own them but even brokering a modest amount of their used stock list at 5-8% commission I would expect them to have more than >£10k to show for their efforts at year end
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There's little purpose in carrying excess capital in the company, if profits are made then typically they would be shifted out from the company in the form of salary, dividend or pension payments. Hence always low Net Assets in this type of business, not a surprise.
 
Iliade said:
Some friends lost several tens of thousands to a brokerage that went awry while completing the sale of their boat... About fifteen years ago IIRC.
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But that was, IIRC, because they'd put their customers' (buyers' and sellers') money into their own account, rather than in the separate escrow(?) account meant for that purpose. Otherwise, the firm could have gone under but the customers' money would have been safe.

I am no legal or financial expert, but imagine that might well be fraud, and that they were relying on customers' money to run the business day-to-day suggests they might well have been trading while insolvent, an offence in itself.
 
LittleSister said:
I am no legal or financial expert, but imagine that might well be fraud, and that they were relying on customers' money to run the business day-to-day suggests they might well have been trading while insolvent, an offence in itself.
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We carry out business every day on this basis. Every time you place a deposit for, say, a new suite of furniture for delivery before Christmas - or as I did yesterday booking tickets for the Turner exhibition and a table in one of the Albert Hall restaurants you become an unsecured creditor. Likewise you see almost daily reports of consumers losing money from business failures. Not always fraud or theft, although if a broker did take client money out of the client account it would almost certainly be a criminal offence.

Where there is potential for confusion is where the same company or person does both brokerage and selling boats by way of trade, as most of the big firms do. The ones I have dealt with have very clear systems to keep the two activities separate. If buying a boat, new or used it is important for the buyer to know exactly who he is dealing with and the nature of the contract.
 
“If buying a boat, new or used it is important for the buyer to know exactly who he is dealing with and the nature of the contract.”

Wise words.

Anyone wanting a sobering read might look at B.A.Peters v Moriarty where money hadn’t been put into a client account and the court of appeal declined to adjust matters so as to do so - with, it has to be said, excellent reasoning touching on the fact that to do so would have been unfair to other creditors.

https://www.casemine.com/judgement/...b8b8/amp?usqp=mq331AQIUAKwASCAAgM%253D&_kit=1
 
benjenbav said:
“If buying a boat, new or used it is important for the buyer to know exactly who he is dealing with and the nature of the contract.”

Wise words.

Anyone wanting a sobering read might look at B.A.Peters v Moriarty where money hadn’t been put into a client account and the court of appeal declined to adjust matters so as to do so - with, it has to be said, excellent reasoning touching on the fact that to do so would have been unfair to other creditors.

https://www.casemine.com/judgement/uk/5a8ff75860d03e7f57eab8b8/amp#origin=https://www.google.com/&cap=swipe,education&webview=1&dialog=1&viewport=natural&visibilityState=prerender&prerenderSize=1&viewerUrl=https://www.google.com/amp/s/www-casemine-com.cdn.ampproject.org/c/s/www.casemine.com/judgement/uk/5a8ff75860d03e7f57eab8b8/amp?usqp=mq331AQIUAKwASCAAgM%253D&_kit=1
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Yes, that is a pivotal case which established the tests of a trust when used as a means to securely hold clients' funds during a sale and purchase transaction. Client accounts in the way they are set up now are not a collective "pot" but a series of discrete trusts holding funds on behalf of the individual clients. Peters did not understand this distinction (along with many others!) and complicated by the fact that they tried to move funds into the client account from the trading account which was in debt to the bank!

In a way amazing that brokerage type business had continued for years without a clear understanding of the law of trusts as applied here, and it needed to go to the highest court in the land for clarification.
 
Tranona said:
Yes, that is a pivotal case which established the tests of a trust when used as a means to securely hold clients' funds during a sale and purchase transaction. Client accounts in the way they are set up now are not a collective "pot" but a series of discrete trusts holding funds on behalf of the individual clients. Peters did not understand this distinction (along with many others!) and complicated by the fact that they tried to move funds into the client account from the trading account which was in debt to the bank!

In a way amazing that brokerage type business had continued for years without a clear understanding of the law of trusts as applied here, and it needed to go to the highest court in the land for clarification.
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I’m afraid that quite a few unsatisfactory practices work ok until there isn’t enough money to go around. By which time it’s often too late.

‘Trust but verify,’ as the late President Reagan was fond of saying.
 
Quite scary the way money can be mishandled, glad my boats have only ever cost a fraction and a small one at that of a new boat!!
 
stav said:
Quite scary the way money can be mishandled, glad my boats have only ever cost a fraction and a small one at that of a new boat!!
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Maybe, but thousands of boats change hands every year without problems and equally thousands of new boats get sold to happy owners. If course sometimes things go wrong - but you only hear about these and not the happy ones. To redress the balance I have bought 2 new boats and despite the large sums involved both went like clockwork. There is something slightly unreal about sitting in an office in a marina in Poole waiting for documents to come through from Germany and Southampton and on receipt completing a 6 figure deal on a boat that had just past its final inspection, using my debit card to make the final payment. Boat arrived 6 days later exactly as agreed. The first one was even more complicated as it was paid for in DMs which I had bought a forward for and did not see the boat until 3 months later when we arrived in Corfu for a 2 week holiday!
 
GEM43 said:
I only just escaped being entangled in the B A Peters collapse. That experience led me to insist on using my solicitor's client account for future boat sale/purchase transactions.
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If you had been a brokerage client with Peters you would not have lost anything except for the delay releasing the funds because of the court proceedings. The problem (as you may know) was with new boat buyers who believed their deposits had been put in the account and tried to make a claim from the account. Brokerage accounts were pretty secure even before Peters and subsequently the type of account devised by the YDSA/BMF and used by virtually all brokers is superior for this type of transaction to a third party escrow arrangement and free. BTW plenty of examples of solicitors raiding client accounts - and their insurers being tardy in meeting claims from victims!
 
macca499 said:
Was watching the youtube channel of a well known UK broker and decided to look up their website to scroll through their listings. Their companies house page was near the top of the search results so I clicked in for a nosy - as with almost any other well known brokerage I have looked at on companies house, they have next to nothing in terms of net worth which astounds me, considering the high value of new and brokerage boats to their name and would seem they are trading on very thin ice, this also follows on from the post about Sea Ventures a few weeks ago who seem to be very much in business following their recent phoenix. Even scrolling back a few years to better times and these brokerages still don't seem to show much in the way of net worth or profit. Curious what the deal is here as it seems to be industry wide.
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Bit like estate agents. Crooks in suits. After shaking hands you best make sure your Rolex is still on your wrist.
 
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