Found the right place, now the Offer?

[CTPub]

I have found the right business for my needs. I am currently going throught the financials and have hired an accountant. I have asked the owner to provide me with a detailed inventory list and the lease to review. I also asked for all the current vendor info and want to make sure all bills are current and employee records. I have also contacted the leaseholders and they say the lease is paid on time. When should I speak to them to ask if they would consider renegotiating the lease, before the offer?

I understand I have to write a letter of intent and give a 10% deposit to make an offer. How do I determine the right price, asking is 145k with some owner financing. I want to pay cash and no fininacing but want to get the best deal possible. The owner has said he is flexible. Any suggestions?

Once the offer has been accepted I have to transfer the liquor license into my name in Connecticut. Should I use a consultant for the liquor license process or do it myself? In addition would I be able to operate under the current owners license until mine is approved?

I also have to open an LLC for protective purposes. I am buying this alone, does anyone have any advice on how to handle the LLC. Should I include my wife as a partner.

Any other advice would be much appreciated.

Thank you

[seed]

Don't do it you will poke your eye out! Just kidding congratulations this is an exciting time!! If paying in cash up front you may be able to save some cash? I would call your local agencies to get all the information before closing the deal. Most likely you will have no problem but imagine giving up $145,000 and not be able to obtain a liquor license for some reason, OUCH! It happens a kid here bought a convenience store and paid cash but the city would not give him any licensing due to a felony conviction. Good luck and keep us posted and use this thread for all you questions.

[scott1988]

Hey Seed beat me to what I was thinking but I was gonna say the same thing. One thing I would do though (and I've heard of a lot of people doing this) is to have a contingency agreement written out in the sales contract / bill of sale. What I would do is have an agreement set up that states that the money will be transferred into the current owners name once a license transfer has been ok'd AND APPROVED (not just verbally but with an actual paper license in hand or some other documentation from the city whether it's a letter of approval or otherwise from the city/county that states that you will have a liquor license transferred in your name from the current owner) by the city/county. Otherwise, if you give this person the money AND THEN try to get the license and can't, you will basically be out $145k. Even if you take them to court over it, they could've have already spent the money and even if you win in court and they can't pay and get sent to jail, you're still out the money. Just because you win a court case doesn't mean you get your money if they simply don't have it or won't give it to you.

Be smart before just handing someone a $145,000 check. Talk to an attorney but make sure you have some sort of contingencies in place and try to get a bank involved if you can so they understand what needs to take place as well. The more people you have involved on your side, the better. That way if the person tries to screw you out of the money, not only do you have a sales contract but you've also got the bank involved. I don't know what they can and can't do "legally" but maybe they can put a hold on the money in their account (even if it's with a different bank the two banks may work together on this type of sale) until the license transfer is complete.

Simply put, I would just make sure you both understand EXACTLY what needs to take place before you can "legally" hand over your money. License transfers aren't always as straight forward as you may think as Seed pointed out.

Also, find out if they are willing to give you any warranty info on the current equipment and if they are willing to warranty anything for a given length of time. If they will, then that could help you a little but if they won't (which I wouldn't), you need to know what to do if something breaks down and be prepared for the costs. It would suck if they've been cooking food in a ventilation system that needs $10,000 worth of upgrades or a fryer or two is broken even if you think that they're using them. Or if a cooler has leak or drain issues or who knows what else. Just would hate to see you have to put another $20k or $30k into the place a month or two after you've opened because you were too naive. If you're not familiar with some of the equipment (like kitchen hood ventilation systems, liquor gun dispensing systems, soda dispensing systems, coolers, cash register/POS systems, lighting, AC & heating systems and EVERYTHING else I haven't mentioned, you may want to have someone that you trust come in and do an inspection and/or appraisal. Don't get the two confused because an inspection is simply going to tell you if the building and equipment are in working order and up to current or previous code guidelines (some codes allow for older equipment like kitchen hood ventilation systems to NOT have a rail guard on the rood or have a platform for example and can be "grandfathered" in as they say). An appraisal will just give you an idea of what the place is worth but an appraiser would want to know if everything was in good working order to give an accurate estimate. Sometimes, you can find this person that knows enough about both to be available to do both things. Just a thought.

Don't know how much experience you have in this industry so if you don't, get someone to help you that does. If you don't, you'll probably regret it. If you do have experience then good for you and wish you the best.

[DavidTownsend]

See my current business plan here (http://www.davidtownsend.info/capecoralbusinessplan) and then contact me. You'll learn some things by reading the plan. And I hope you have a plan for your new business. If not, use mine as a guide.

I have done dozens of these deals and I can help you avoid some pitfalls. Don't worry, this is not a sales pitch for consulting services. I'm too busy with my own stuff to do any consulting these days. I just like to help people that are just starting out.

David