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Joined 1 year ago
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Cake day: November 30th, 2023

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  • KokoBWarned@alien.topBtoSmall BusinessSandwich Shop Help
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    1 year ago

    It sounds like the owner is saying he distributes 30k to himself at the end of every year and wants a 4x multiple. You can probably consider this SDE or cash flow if you hear those terms thrown around. He probably is trying for a higher multiple because he is claiming it’s semi-absentee. I’d be careful when people throw those words around. To be perfectly honest, I’m not even sure this is sellable. 30k is not really a liveable wage and I’m just not sure what kind of buyers this will attract. You may be bidding against yourself. Would he take 30k cash and a 1 month close? How desperate are they to get out of there.

    You’ll need to ensure historically that is what he pays himself. His tax returns should tell the story. Never just take his word or the broker’s word for anything. These very small businesses can be hairy when it comes to numbers. Do not trust anything.

    Ask what salary expenses are for the staff. If you decide to be hands on you can venture to guess you can take home 30k+manager salary and maybe save other costs if you take a look around the store.

    You may not even need a bank. Give him 20% down and pay out with a seller’s note. 5 years 10k plus interest each year for instance. You are the buyer and deserve protections also. Earn outs protect a buyer. Look in to that.