Need some business buying info

[bubbas1]

I am looking at a business and have a few questions.
The business only is for sale. The building is leased.
Now for the questions.
How do I find out the fair market value of this business?
I know you would add up all the assets and get an amount but how much does the cash flow add into the total price?
It shows a 17% cash flow from the annual reciepts so I believe its in the ballpark for being average.
How do I find out how much the current owner paid for the business. I went to the local register of deeds but since its only the business that has been sold before (Building has always been leased) they do not have any record of how much the current owner paid for it. There has to be a public record somewhere but no one seems to know where it would be.

 

[THE KOD]

they do not have any record of how much the current owner paid for it. There has to be a public record somewhere but no one seems to know where it would be.

........................................................

I would ask who they bought it from and a way to contact them.

Call them and ask how much they sold it for. How much did the business earn when they owned it.

If not forthcoming with this info.

forget about it.......

 

[MadJack]

I am looking at a business and have a few questions.
The business only is for sale. The building is leased.
Now for the questions.
How do I find out the fair market value of this business?
I know you would add up all the assets and get an amount but how much does the cash flow add into the total price?
It shows a 17% cash flow from the annual reciepts so I believe its in the ballpark for being average.
How do I find out how much the current owner paid for the business. I went to the local register of deeds but since its only the business that has been sold before (Building has always been leased) they do not have any record of how much the current owner paid for it. There has to be a public record somewhere but no one seems to know where it would be.

what kind of business?

 

[countinguy]

Don't concern urself w/what the other guy paid for it.

Most businesses are worth 2 years cashflow plus assets. If that number is way off don't buy it.

 

[Amfan1]

Business should be upfront with this info. Also, when a building is leased, before you buy, you should be talking to the lessor. You need to know if the lease will be long term. Is the current lease still good when you buy the business. If so, for how long. What kind of rate will you be able to work out for the next lease. This will seriously (or could anyway) effect you cash flow. In addition, just because you lease a building doesn't mean your not responsible for the maintenance of it. This is often the case with restaurants; as an example. In many cases, all but the most major of building work you will be responsible for. Hope this helps.

 

[bubbas1]

The replies really helped me out so I know which way to go now. Especially the parts on how to figure its worth and what to check for in the lease.
Its a bar/reasturant inside of a mall (not a strip mall). We have been in there a few times just to check out how the workers were, the type and percentage of clientele that came in ( shoppers, mall workers, and walk ins that came in just for the bar and not to shop) and came up with ideas on how to increase the customer base. Just by sitting at the bar watching and listening to other patrons we got a lot of info on why they were coming in and why others would walk out immediatley without ordering anything.
The fix is simple for the walk outs...wipe off the tables/booths after the previous customer leaves. People would walk in..see crumbs and crap on the tables and walk right back out. Meanwhile you have the waitress sitting at the bar yakking it up with her friends. We know the owners are part time (not there very much) so we figure its the inmates running the asylum. Easy fix there.
We are going to set up a meeting with the owners to get some info from them and then discuss what we want to do next.

 

[The Sponge]

The replies really helped me out so I know which way to go now. Especially the parts on how to figure its worth and what to check for in the lease.
Its a bar/reasturant inside of a mall (not a strip mall). We have been in there a few times just to check out how the workers were, the type and percentage of clientele that came in ( shoppers, mall workers, and walk ins that came in just for the bar and not to shop) and came up with ideas on how to increase the customer base. Just by sitting at the bar watching and listening to other patrons we got a lot of info on why they were coming in and why others would walk out immediatley without ordering anything.
The fix is simple for the walk outs...wipe off the tables/booths after the previous customer leaves. People would walk in..see crumbs and crap on the tables and walk right back out. Meanwhile you have the waitress sitting at the bar yakking it up with her friends. We know the owners are part time (not there very much) so we figure its the inmates running the asylum. Easy fix there.
We are going to set up a meeting with the owners to get some info from them and then discuss what we want to do next.

This is gonna take a lot of your time i hope you are ready for it. If you were 25 i say go for it but you are a little older just talking from personal experience. One other thing about a bar you have to put your foot down right away if you get a patron that is loud and obnoxious. My buddy is going thru this now. One guy can kill a business. Since my buddy threw this guy out his business has picked back up. But my buddy has let this guy back a couple of times and the same thing happens. It could even be one of your friends. You might think nothing of it at first but it could become a headache down the road. some guys unfortunately life is a bar. If you put those giant beertanks i saw you sitting next to in Vegas, i might fly out there to sample them. Good luck.

 

[Sportsaholic]

I ran one for about 20 yrs. 150 seats grew to 350 + in the summer........Hope you like working nights, weekends and holiday's...........You also said "we" so I hope you like 3'somes because you'll be married to this type of business..........


Hope it works out for you!

 

[Old School]

90 hour work weeks and no vacations..:scared

but the scenery is usually nice..:00hour


best of luck...

 

[bubbas1]

We tried to purchase a bar out of state about a year or 2 ago but the financing fell through. We learned alot that time so if this gets that far we know what mistakes to not make again.
Think of a small mom and pop tavern with a grill and that is basically what you have here. Personnaly just like the atmoshphere of small bars. No room to expand so we have kicked around ideas on how to get a more steady customer base.

Our main goal is to start out with something small like this and then move up to bigger and better things down the road. So for us its a means to achieving the ultimate goal.

We know the hours will be long. We both have no problem with that. We are both the type that have no problem doing things 100%. Whether its work or play its always all out. We also know that work and play can never be mixed.

 

[marine]

where is this place going to be located? can i be the first to get a beer poured out of the tap when it comes under new ownership?

 

[AR182]

bubbas....

restaurant business is a very tough day in & day out operation....

you should have an accountant look at the books.....good luck with whatever you decide.

 

[bubbas1]

Ar182..I have an uncle who is a partner in a accounting firm and he would help me out if the time comes. ( He walked me thru a bunch of things last time we tried this.) Met with the broker a few days ago (couldnt help us much so it was mainly to sign a confidentiality agreement) A meeting is set up with the owners for Sat. So we will see what happens there.

Marine..If it happens I will label a mug with "Got Butt Darts?" on it just for you.:mj07: :mj07: