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Selling a Failing Restaurant

Shelli Margolin — Tue, 22 Nov 2011 00:10:08 +0000

By Shelli Margolin, Restaurant Business Broker

In the current economy, many restaurants that once thrived are sadly no longer able to sustain a positive cash flow. However, the good news is that selling a restaurant that is operating under a loss or poor revenues is possible.

The biggest barrier to entry in the restaurant industry is the initial build-out costs. If your restaurant has a functioning hood, flood drains, three part sink and a permitted refrigerator unit, then your restaurant will sell. If you have a liquor license, your restaurant will sell for more!

The most common obstacles to selling your restaurant are:

1. The price you want vs. the actual market price

2. Messy, incomplete or none existent books and records

3. Deferred maintenance

4. Not being up to code

5. Expiring lease

6. Time and energy

Preparation is the best way to overcome these obstacles:

1. Be prepared to carry a note, instead on insisting for all cash. If you price your restaurant too high or too low, you won’t get serious responses. Tailor your expectations to the reality of the market.

2. Your books and records can be your best friend in selling your restaurant. They will highlight such things as Discretionary Earning which can actual cause your business to show a positive cash flow for a new buyer. Any non-operational expense, such as your car payments or cell phone can be added back to your bottom line.

Your books and records can also be your enemy, if they are not kept organized and up to date. Additionally, many businesses are opting to take cash instead of credit cards. It is very typical that cash transactions aren’t recorded. However when selling your restaurant, it is to your advantage to show all your revenue in order to receive a higher selling price. Keeping a simple hand written or spreadsheet record of cash sales can often be sufficient documentation for a buyer, …but only if those cash sales are real.

3. Make sure all your major equipment and floor drains are in working order and are up to code. Otherwise be prepared for a price that will reflect getting those items working and up to code.

4. A new buyer will need to go through a County health inspection. If your restaurant isn’t up to code, it will not sell!

5. Location! Location! Location! If your lease is expiring this year, you may want to think about getting an extension or exercise your option to make your restaurant more attractive to serious buyers.

6. If you are planning on trying to sell your restaurant by yourself, be prepared to spend a lot of time and energy on the marketing, looky-loo’s and a barrage of questions from would-be buyers. Selling a restaurant is a full-time job and proper marketing can get expensive to successfully sell it yourself.

The decision to sell is as much an emotional decision as a business one. Get some help by enlisting an experienced business broker. They can help you overcome most obstacles and discreetly bring you qualified buyers, so you can your spend your time and money running your restaurant and living your life.

Enlist an experienced business broker. They can help you overcome most obstacles and discreetly bring you qualified buyers. We currently have over 3,000 buyers in our database alone. For a free consultation, please don’t hesitate to call me. Shelli Margolin-Mayer, Business Broker: (310) 882-2200 ext. 128. I’m happy to help.

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Selling a business in the media, entertainment, creative, film and TV industries? 10 Things to Consider

Stuart Gross — Tue, 06 Sep 2011 20:03:52 +0000

Are you the owner of a small or medium-size
business in the creative of media industry who dreams of “getting
out” and retiring, writing a memoir, or simply getting away
from it all? Thinking about selling your business? In today’s economic
climate, selling your media or creative business can be a
complicated and daunting experience.
The skills and knowledge you acquired by running a successful
business are not necessarily the same skills you will need to sell it.
Here are 10 things to consider:
1. Am I REALLY ready to sell my business? One of the most
important questions a buyer has is, “Why are you selling?”
Selling your company is a life-changing event, with both
positive and negative effects on your financial condition.
Your mental and physical health may also be affected. You
need to know if you will have enough money, moving forward,
to live the way you choose. It is a very big decision. …And you
need to be able to answer the question for potential buyers as
well as for yourself.
2. Can I sell my business to a new owner? Is it transferable?
If I go, can someone else take my place? It’s not just your
creative skills that may need to be transferred; it is also the
relationships that mean business for your business. Can a
new buyer do what you do and maintain and attract business?
You may need to stay on board for a while to make a transition
work properly. Sometimes the choice to stay on helps you to
build the financial base you will eventually need to retire.
3. What effect will the process have on my clients, my employees,
and my daily operations? There are some real challenges
in the process of selling a business. It is important to keep
your confidential information from the public. You must make
sure that the impending sale does not create concern and
problems with your employees and your clients. Your relationship
with your landlord, if you have one, needs to be
handled with care. During the process of meeting, qualifying
and negotiating with buyers and the complexities of a sale,
you must still be able to keep your focus on the continuing
operation of running your business.
4. What is my business really worth? Valuation of a creative/
media/entertainment business is based on several key factors:
A. How much money can a buyer expect to earn after
taking over?
B. What are the barriers to entry that might stop the buyer
from starting his own similar company?
C. What is the value of your assets, equipment, inventory,
improvements etc.?
D. What are the risks and growth opportunities of
the business?
For businesses under $10 million, the multiple of earnings
method is the most common basis. The adjusted earnings of
the business is multiplied by a general index for that industry
and type of business, and then adjusted by financing issues,
growth potential, inventory, asset value, etc. A well-priced
business is critical to buyer attraction and critical for the
seller in getting the value he has built.
5. Should I use a broker? Once you decide to sell the business,
whether or not you use a business broker should be a priority
consideration. In the media related and creative businesses,
any representative you choose must have industry experience.
A great deal of knowledge, work and time goes into valuing,
promoting, marketing, qualifying buyers, negotiating, financing,
completing a transaction and effectively transferring the
operation of a business.
A broker who understands, or has been in your industry will
realize that they are seeking a truly special kind of buyer.
He should have the ability to find and attract that buyer. A
broker who is active in the industry will already be working
with active buyers and can identify potential strategic buyers
for the business.
Well marketed, priced and negotiated deals may often net
the seller more than if he pursued and arranged for the company’s
sale by himself.
6. What kind of buyer is capable of taking over this business?
Ideally, you want a buyer who is genuinely interested in this
business, one who has the skills necessary to run it, and the
financial wherewithal to make this purchase.
Because the “right buyer” at the right price will sometimes be
a one of a kind find, you must be prepared with all of the information
that a qualified buyer will demand. The good buyer
will be asking lots of questions – this is perfectly normal and
necessary. The “right buyer” will respect your confidentiality,
and will agree to sign a “Non-Disclosure Agreement.” However,
the “unqualified buyer” can become a very expensive waste
of time.
7. How do I market the business? The first thing to be done
is to compile a complete information package, which should
include the history of the business, description of the industry,
competition, clientele, marketing, opportunities/threats, products
and services, etc. It should also include at least three
years of financial information and analysis of discretionary
earnings, equipment and inventory.
The normal process for marketing a business is to post it for
sale on the plethora of listing sites on the Internet, to contact
known buyers interested in this kind of business, or to go
directly to targeted strategic buyers who may include competitors,
related businesses or aggregators in that industry.
8. How do I make a deal? These negotiations are based on a
balance between the buyer’s perceived value of the business,
(his or her potential, earnings, ROI, future value, the ability to
pay for the business or operate the business, earning a living
wage and paying off financing if any) and the seller’s perceived
value (does the purchase price replace my salary, is it
enough to give up a business I have built, is it worth more to
the buyer than it is to me?)
Negotiations require objectivity, an understanding of your own
valuation and a willingness to structure a win/win situation.
Often third parties such as business brokers can take the
emotional spin out of the deal making.
9. What about financing? A business acquisition can be done
in any combination of cash, seller financing, bank financing,
earn outs, etc. Earn outs are typical in deals where the seller
and buyer need to cooperate to make the future earnings
happen.
10. Structuring the ACTUAL SALE. How does the seller go about
with the transfer of the business assets, including inventory,
equipment, goodwill, intellectual property, brand equity, customer
data bases, etc., into a new or existing entity for the
buyer? There are many ways to accomplish the actual sale,
but for most small and medium sized businesses the process
can be done in California through an Asset Purchase Agreement.
As such, all of the assets are transferred to the buyer
in an escrow process, which is usually as manageable as the
sale of a home. If you need to sell the actual entity as in a
stock sale, you will need quite a bit more guidance.
The sale of your business, especially one that you have built and
run for a long time, is a life-changing event. The business is
usually the most valuable thing the seller owns. The purchaser
is often using his life savings or leveraging his possessions to
make this happen. This is serious business and should be given
its due care and consideration. You need to be guided by your
trusted advisors and be prepared for all of the exigencies of the
process. At best, it can be the financial realization of a life’s work.
____
Stuart Gross is a media business sales
& acquisitions expert with more than 30
years of experience in business, film and
television production, entertainment, and
media. As founder of Harmony Pictures,
Gross executed one of the industry’s
first IPOs for a television commercial
production company.
He can be contacted at sgross@bizex.net. 310 882 2200 Ext.118

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Jered Chapman joins BizEx Business Brokers in Marina Del Rey

Jered Chapman — Tue, 28 Jun 2011 18:02:44 +0000

MARINA DEL REY, CALIFORNIA (June 21, 2011) – BizEx is pleased to announce that it recently welcomed Jered Chapman as the newest member of its team of business brokers.

Jered brings years of business experience to BizEx. Following a successful career as a college coach, he began overseeing operations and consulting with various companies and organizations in Philadelphia and Los Angeles. He has worked with business owners in various industries, including restaurants, night clubs, health clubs, sports apparel retail, graphic design, and distribution centers. Jered’s background emphasizes his knowledge in business development, operations management, and consulting. He is a skilled communicator and project manager, helping clients understand the business selling and buying process.

As a BizEx Business Broker, Jered provides all relevant services business owners and business buyers require to be successful in the buying and selling of a business including: valuing businesses, marketing and listing businesses for sale, the creation of Confidential Business Reviews, pre-qualification of businesses for SBA business acquisition loans, working with Buyers to identify acquisition targets in relevant industries and facilitating transactions.

BizEx is a Los Angeles Business Broker providing M&A Quality Services for Small Business Owners. We leverage our Technology and Expertise to Simplify & Expedite the Buying and Selling of Businesses. In the buy sell business transaction, matching the right Buyer with the right Business is how we define success.

“We are happy to welcome Jered Champan to the BizEx team. Jered brings prior Business Brokerage experience and excels in the project management, coaching, and communications elements of the transaction, which are core qualities of service in the business sales industry.” –Michael S. Davidson, founder of BizEx

“I selected BizEx after having worked with other brokerages in the past. I can aptly say that Michael Davidson brings professionalism that no other brokerage I have encountered can rival. His sophisticated and comprehensive approach to the business sale and acquisition process allows brokers the resources to spend more time assisting our clients. I am excited and honored to join Michael and the impressive group at BizEx.” –Jered Chapman, Business Broker

Jered’s profile can be read at http://www.bizex.net/business-broker/jered-chapman. He can be reached by email at jchapman@bizex.net or by phone at 310-882-2200 Ext. 129.

Shelli Margolin Joins BizEx Business Brokers in Marina Del Ray MARINA DEL REY, California (March 22, 2011) – BizEx is...

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Inc’s 10 Questions to ask before Buying a Business

Michael S Davidson — Thu, 26 May 2011 19:13:18 +0000

I just read an interesting Article from Inc., entitled 10 Questions to ask before Buying a Business.

Many experts are predicting that a huge wave of businesses will become available over the next decade or so as baby boomers look to sell. As the economy continues its climb into a full-blown recovery (we hope), it just might be the perfect time for you to fulfill that lifelong dream of buying a business.

If you can find the right business that is the right fit for you, I think this is a great time to buy!

Overall, I think it’s a pretty good list. When we create a Confidential Business Review (CBR), we try to address these questions up front before you even meet with the owner.

Some of the questions not asked by Inc., which we think are important include:

Can you as a new owner successfully run and operate this business? If not, the other questions don’t really matter.
What do you bring to the table? Ideally, we want people who bring more to the table then the owner. You don’t have to duplicate their strengths but you do need to have strengths that are applicable to owing the subject business. These tend to be the true success stories.
What are the challenges facing the company? Odds are good that this is why the owner wants to sell. If your not the solution, your probably better off letting someone else take over the company.
Do you have a business plan? Most SBA Lenders require a new owner to have a business plan, for good reason. People with plans generally outperform those who don’t. Furthermore, if you know what your doing, creating a plan is easy. If you don’t, you better get help or start questioning the value your really bring to the table outside of your life savings!
Are you an Entrepreneur? Only about 2% of the population own a business, making them a rare breed. Most of them feel like they have to own a business regarding of ROI, wealth or “prestige”. On the flip side, if your not an Entrepreneur, you might find out the hard way that owning a business is a lot harder and demanding then you imagined.

There is a saying in our firm. Matching the right buyer with the right business is how we define success. We hope that all buyers, whether they use a broker or not, take this advice to heart!

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Shelli Margolin Joins BizEx Business Brokers in Marina Del Ray

Shelli Margolin — Tue, 22 Mar 2011 23:50:27 +0000

MARINA DEL REY, California (March 22, 2011) – BizEx is pleased to announce that Shelli Margolin has joined our business broker team. Shelli brings to BizEx a solid background in business sales and acquisitions. She specializes in selling restaurants, retail, professional services, business services and the personal services industry.

Shelli comes to BizEx with direct and unique experience working with small business owners. In addition to her experience as a business broker, she has over 15 years in local government providing business assistance and consultation in the areas of permitting, financing, expansion and transitioning of ownership. Her inside knowledge of permit processing for restaurants and liquor licenses is particularly helpful in the sale of restaurants and other businesses.

According to BizEx president, Michael Davidson, “Shelli’s diverse experience working with entrepreneurs and start-ups has enabled her to better analyze businesses for sale and guide them through the acquisition process. Her natural consultative approach makes her a great fit to our team of business sales experts.

BizEx is a Los Angeles business brokerage providing M&A quality services for small business owners. BizEx leverages technology and expertise to simplify and expedite the buying and selling of businesses. In the buy sell business transaction, matching the right buyer with the right business is how BizEx defines success.

Shelli Margolin’s BizEx profile can be read at http://www.bizex.net/business-broker/shelli-margolin. She can be reached by email at smargolin@bizex.net or by phone at (310) 882-2200 ext. 128.

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Santa Ana Mail & Business Center Shelli Margolin just launched a new listing: http://www.bizex.net/listing/347 Santa Ana...

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Arthur B. Kessler joins BizEx Business Brokers in Marina Del Rey

Arthur B Kessler — Tue, 04 May 2010 22:10:32 +0000

I am very happy to announce that in these difficult, changing times I am making a positive change with my business brokerage activity.

I bring to BizEx more than forty years of successfully assisting people with the purchase and sale of businesses. I have sold businesses as diverse as car washes, mail centers, medical clinics, and manufacturing companies. My background includes law, finance, and government. I am a skilled negotiator and very persistent in the pursuit of the goals of my clients.

As a BizEx Business Broker, I will provide all relevant services business owners and business buyers require to be successful in the buying and selling of a business including: valuing businesses, marketing and listing businesses for sale, the creation of Confidential Business Reviews, pre-qualification of businesses for SBA business acquisition loans, working with Buyers to identify acquisition targets in relevant industries and facilitating transactions.

BizEx is a Los Angeles Business Brokerage firm specializing in the sale of small and medium sized businesses. Selling a business is more than just a financial transaction; it’s a life changing event for both the Buyer and the Seller. Matching the right buyer with the right business is how we define success.

“I selected BizEx because I have known Michael Davidson, the owner of BizEx, for many years and appreciate his honest and sophisticated approach to serving clients. I believe BizEx offers the most complete and comprehensive approach to the acquisition and sale of businesses. I am honored to join Michael and the very professional staff at BizEx.” – Arthur B. Kessler

“We are happy to welcome Arthur to our team. He brings a wealth of brokerage experience to our organization and embodies the core qualities of integrity, service and expertise the industry has come to expect from a BizEx Business Broker.” – Michael S. Davidson, founder of BizEx.

Arthur Kessler

Business Broker

310-882-2200 Ext. 126

akessler@bizex.net

http://www.bizex.net/business-broker/arthur-kessler

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