I’ve recently been presented with an opportunity to purchase a local business. The business is a very popular restaurant & bar with additional revenues from recreational sport leagues and an event pavillion on property.
Income each of the last 2 years (all ive been shown so far) is in the neighborhood of 1.5m a year with about 3-400k in profit after cogs and other expenses.
Owner and I have settled on a purchase price of 750k for the business with a 10k monthly lease paid to him as he will still retain the land the business sits on. (The gist of his want to sell is hes getting older, doesnt want the daily stress anymore, but wants what he built to continue on without getting bulldozed)
I am very familiar with the business and confident with my personal experience in logistics management and S&OP to maintain profits and grow this business. Problem is i have zero idea as to how to begin securing the captial for the purchase, some minor immediate improvments, and inventory buyout.
Those of you that may have similar experience, where did you start? Banks? Private investors? What advice would you give to someone with an opportunity like this.
Contact SCORE and see if you can get paired up with a mentor that has bought and sold businesses before. It’s free and could be a great resource. More information is needed to know for sure if that valuation is fair, but on the surface it seems reasonable, especially if you are already comfortable with the idea of running that business. As others have mentioned, you might be able to negotiate owner financing for all or some of it. That will depend on what the sellers goals are. If it’s primarily cash flow rather than reinvesting, they might go for it. There is definitely risk there to them though, so they would have to be very confident in your ability to successfully run and grow the business.