need some advice from bar owners

[caseys pub]

im working out trying to buy a bar from my father right now and i need to know if this makes sense to others as it seems to to me. hes going through a divorce with my mom and she wants 200k over x amount of years which he is going to do. he told me that he would sell me the bar 250k with everything in it, ive been running the bar for 3 years. this is what im going to offer him is 100k for the bar and i will pay my mom what she wants over 5-7 years. that 100k i give him i will be paying 10% interest on on a line of credit that i have but that 200k im paying my mom over 5-7 years is interest free.

i do the books and know all the financials and he brings in 100k a year profit.

does it make sense to pay the 100k to him and pay 10% on that money which i will try to pay off asap and then pay my mom the 200k over the 5-7 years no interest and i will profit 100k a year from it?

i think it makes sense but this is the first business i have bought, hes been offered 350k for the place before but since im his son he will sell it to me for 250k.

[Havensloft]

Is your father agreeing to this arrangement?

[originolsin]

If you know for sure that he is bringing in $100k free and clear, then yes, that does line up with a form of valueing a business.

Let's say it takes you 2 years to pay your dad back. That is $120k unless you get into compounding or ammortizing or any of that crap.

Then you pay your mom the $200k, but that wont start the first 2 years. Is she going to be okay with that?

Now you are up to $320k for this business, which is pretty normal based on the 3x profit. Now you ad in your improvements, building?, fixtures, etc. and it is still looking pretty ok.

Or, did your dad give you terms on $250k? And then you can just stay out of the whole divorce/money thing, sometimes that can be a bad middle to be in. Death and divorce both bring out the worst in people when it comes to money.

Definately have some things to think about!

[ca. club owner]

hmmm... it kinda makes sense.. but there are a few things you should try. Try to get a line of credit for the full 250k. Or give him the 100k an come up with a figure an give your pops X amount of cash every QTR for like a yr an a half.

The reason I say that is, you dont want to get mixed up in what moms an pops has going. I mean it sounds good. But it neva ends up that way. You want to keep your deal str8 with pops. The object is to own it free an clear soon as you can. You dont want to be having some 5yr payment going on. Just for the sake, anything can happen. Biz gets slow, someone gets hurt an has you tangled up in court. Then you will have, more shit to pay on top of having to pay moms. Then if you up an cant pay moms. She might get upset an now its a whole family ordeal. It can just get ugly. My advice is to find a loan or a line of credit that can cover what your pops wants. An just make payments on the LOC or LOAN to the bank an not have the stress an worry of family matters... stay as far away as you can from that...

Money Talks In All Languages

[walawdog]

I'd stay away from a line of credit if you can. You might need that down the road for something else. If you mom and dad are both willing to go along with it...I say do it. Besides, is your mother going to sue you if you have a hard time paying? I think it's better to owe mom and dad money versus owing that money to the bank...besides, the bank isn't going to give you 0% terms.