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Flumper.. found you a hookup - Anhil8tor - 09-14-2005

Owners of a 50+ year old business are considering retirement. Business has three convenient locations in growing markets. They each have excellent market share growth history, with a well-established customer base. Sales have grown steadily and are approaching 1.5M, with good cash flow. Qualified partes may email for more info...

Flumper.. found you a hookup - Flumper Barflusterbutt - 09-14-2005

Anhil8tor Wrote:Owners of a 50+ year old business are considering retirement. Business has three convenient locations in growing markets. They each have excellent market share growth history, with a well-established customer base. Sales have grown steadily and are approaching 1.5M, with good cash flow. Qualified partes may email for more info...
What's the catch? These people have no kids?

Flumper.. found you a hookup - Anhil8tor - 09-14-2005

Flumper Barflusterbutt Wrote:What's the catch? These people have no kids?


guess not.... or their boy is gay and their daughter is working at the bunny ranch.

Flumper.. found you a hookup - Flumper Barflusterbutt - 09-14-2005

Anhil8tor Wrote:guess not.... or their boy is gay and their daughter is working at the bunny ranch.
I always wonder why people try to sell business that sound like such a good deal. Of course, anyone that owns a business must first work out their "exit strategy". That is one of the first things you do when you get started.

If you have kids, it is kind of a no brainer if you plan to hand it down to them. But if you don't have kids, then you have to decide how to "sell" it and get the most for it. Most businesses aren't worth much when the owner leaves. So, the best thing is to get a good employee and gradually sell it out to them. They will pay top dollar for it, because they know how much money it makes and they don't have any money, so they buy it out with bonuses.

Otherwise, you just have to go out and find someone to buy it. They usually will not pay top dollar for it.

Flumper.. found you a hookup - Anhil8tor - 09-14-2005

This thing had quite a few adds.. they make them all sound $$$ too. Now if this store has 3 locations that is a plus.. but I am suprised an employee won't take it.

Flumper.. found you a hookup - Flumper Barflusterbutt - 09-14-2005

Anhil8tor Wrote:This thing had quite a few adds.. they make them all sound $$$ too. Now if this store has 3 locations that is a plus.. but I am suprised an employee won't take it.
That's what makes me think that it isn't the great deal they portray. Usually they cook the books for the last couple of years to make it look like a good deal. Who knows though. I would say if it is something that a person really wants to do and the price of the business isn't much more than the cost of the necessary assets at their current value, the cost of the accounts receivable that are collectable, the cash that will be left in the bank, and whatever a fair price is for the current good will of the company, then it might be something to consider.

I would weigh all that against what it would cost to get a loan and start an identical business.

Flumper.. found you a hookup - leucetios - 09-14-2005

Flumper Barflusterbutt Wrote:That's what makes me think that it isn't the great deal they portray. Usually they cook the books for the last couple of years to make it look like a good deal. Who knows though. I would say if it is something that a person really wants to do and the price of the business isn't much more than the cost of the necessary assets at their current value, the cost of the accounts receivable that are collectable, the cash that will be left in the bank, and whatever a fair price is for the current good will of the company, then it might be something to consider.

I would weigh all that against what it would cost to get a loan and start an identical business.

The nice thing with mom and pop business, is that if they are looking to retire you can probably pay them SOME cash down, and then have them finance it to you. It takes some negotiating, but in the long run taking, say 50k now, and then the financing to you at 6% makes them more money than having that cash in the bank would, and saves them some heavy taxes immediately. And some people looking to retire want some liquid cash to do stuff immediately, but then getting that nice 6% check (on say a 10 or 15 yr loan paying interest only or more) is pretty nice.

Flumper.. found you a hookup - Flumper Barflusterbutt - 09-14-2005

leucetios Wrote:The nice thing with mom and pop business, is that if they are looking to retire you can probably pay them SOME cash down, and then have them finance it to you. It takes some negotiating, but in the long run taking, say 50k now, and then the financing to you at 6% makes them more money than having that cash in the bank would, and saves them some heavy taxes immediately. And some people looking to retire want some liquid cash to do stuff immediately, but then getting that nice 6% check (on say a 10 or 15 yr loan paying interest only or more) is pretty nice.
Yes, but a lot of business owners have in mind what they think their business is worth. Often it is much more than what someone would be willing to pay. So, getting them to agree on a price can be difficult. I've even seen them hang on to the damn thing so long waiting on the right price that they let the business go to shit and then they practically have to give it away.

But, you are right. You would almost have to work out some type of buyout where they get paid out over several years. Maybe even agree to stay on for a few years as a consultant.