A business broker called me today to get
financing on a franchise card and gift storefor a potential business buyer. The purchase price he quoted was $495K on a business that was generating an adjusted net income of $103K for the last 3 years consistently.
He told me it was worth the price since, "leasehold improvements", "the lease value", and "goodwill" all added to the value of the business. After I told him to do a ROI analysis - the same as all business buyers should do - he realized that it wasn't such a great deal (the price).
Lenders typically on this type of business will lend on a business that is valued at the mose 3.5X the adjusted net income. If the seller wants more he would have to take back a seller carry back note. Most businesses for sale when they first go on the market are overvalued and the deal is usually not structured correctly for the best possible financing (or receiving financing at all!)
10/3/06 - Today's SBA Loan Tip For Business Purchase Loans/Financing:
Sellers Who Control The Financing Process Usually Get Higher Prices & All Cash
If your business is eligible for financing you will usually get a higher price for it and in many instance get all cash instead of having to take back a note and finance it yourself! That is why it is important to be involved and control the financing process of your potential buyers. If your buyer goes to the wrong lender (and most do) your deal will slow down, drag out and mostly likely die. Controlling the financing aspect when you sell your business you will sell your business faster and usually for all CASH!
Today's Featured SBA Pre-Qualified Business Opportunities For Sale
1. North SF Bay, Sonoma County, California based
Granite & Marble Manufacturing Opportunity For Sale - Growing Industry. Seller Financing. High Equipment Value.. Established Ten Years Ago, This Well-Respected Company Has Grown Into One Of The North Bay, California Leading Stone Surface Fabricator/Installers. They Specialize In Producing Counter Tops From Both Natural Stone And Man-Made Quartz Slab Products. Projects Are Approximately 70/30% Residential/Commercial And 50/50 New Construction/Remodel. Customers Are Builders, Developers, General Contractors, Home Improvement Centers And Home/Property Owners. This Business Operates From A Well-Suited Leased 6,000 Sf, Building With Production And Office Space, And Good Access And Parking. An Adjacent Fenced Yard Provides Storage For Raw Materials And Vehicles. The Current Lease Expires In 3 Years, And The Landlord Will Offer An Extension Or New Long Term Lease. The Location Is Convenient To Major Highways. The Seller Has Not Been Very Active In The Business Since 2000, And Currently Provides Financial Oversight Only. He Is Retiring. A New Owner, Ideally, Should Refocus On Sales And Marketing To Take Advantage Of The Industry Growth. Deal Structure: Price: 740,000, Adjusted Net: 200,400
2. Lodi, San Joaquin County, California based
Liquor Store Business For Sale- Upscale Liquor Store With Niche Products. Excellent Facility & Location.. Price Adjustment! Own An Established & Recognized Business In Growing Lodi! The Business Benefits From Its High Visibility Endcap And Corner Location At Of Two Major Thoroughfares. In An Excellent, Mixed-Use Region, It Is Surrounded By Commercial, Office, And Residential. Deal Structure: Price: 369,000, Down Payment: 369,000.
* Note: These businesses have been business pre-qualified only - buyers of these businesses will also have to be pre-qualified - before SBA loan business purchase financing may be obtained. Approximately 32 different factors (buyer/seller info) are evaluated in the SBA loan process for business purchase loan financing.Technorati Tags:
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