Hey guys,
I have an opportunity to buy a local B&M business. It's a concept that has a TON of potential for franchising as well as other growth. It would probably require me to quit my job and do this full-time (so I need at least $4k/mo from it to live on)
I haven't reviewed detailed financials yet (and have a call with the bank scheduled), but here's what I know.
Current annual revenue = $850k with pre-tax owner compensation =< $150k.
Assets = $200k, and debt will be paid off by purchase price.
Asking price = $575k for the business based on a valuation they had done a few years ago.
I started running the numbers and can't seem to make it work. A $500k loan for 5 years would mean ~$110k/yr in debt repayment - leaving $40k pre-tax.
I have someone with more money interested in possibly partnering on it, or could potentially get seller-financing and/or only buy a majority share in the business.
What do you guys think???? How could I make this deal work?
I have an opportunity to buy a local B&M business. It's a concept that has a TON of potential for franchising as well as other growth. It would probably require me to quit my job and do this full-time (so I need at least $4k/mo from it to live on)
I haven't reviewed detailed financials yet (and have a call with the bank scheduled), but here's what I know.
Current annual revenue = $850k with pre-tax owner compensation =< $150k.
Assets = $200k, and debt will be paid off by purchase price.
Asking price = $575k for the business based on a valuation they had done a few years ago.
I started running the numbers and can't seem to make it work. A $500k loan for 5 years would mean ~$110k/yr in debt repayment - leaving $40k pre-tax.
I have someone with more money interested in possibly partnering on it, or could potentially get seller-financing and/or only buy a majority share in the business.
What do you guys think???? How could I make this deal work?
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