need bar owners advice on buying a bar

[caseys pub]

here is my situation, im buying a bar from my dad, hes been in the business 35 years, ive grown up in the business my whole life, ive been running this bar for 3 years now, i do the books, bartend, manage, etc...im doing everything there.. I know the bar profits 80k a year and with me there working as the owner and cutting some other expenses i know i can profit 100k a year out of there.. here are the numbers... im going to pay him 100k right now which i will be paying 10% on that from a line of credit that i have and then i have to pay him 215k 5-7 years down the road in payments interest free... this makes sense to me but i want to make sure that this is a good investment for me and wanted to get a couple opinions... he profits 80k a year but he doesnt have any payments on any money borrowed because he had the cash to get the bar going.

[Michael Black]

What are the most recent yearly gross sales for that $80,000?

How many square feet is it?

Is this just for the biz or biz & building?

[caseys pub]

its just for the biz, square feet unsure about, we hold about 225, and the gross sales are 450,000

[mgrennberg]

here is my situation, im buying a bar from my dad, hes been in the business 35 years, ive grown up in the business my whole life, ive been running this bar for 3 years now, i do the books, bartend, manage, etc...im doing everything there.. I know the bar profits 80k a year and with me there working as the owner and cutting some other expenses i know i can profit 100k a year out of there.. here are the numbers... im going to pay him 100k right now which i will be paying 10% on that from a line of credit that i have and then i have to pay him 215k 5-7 years down the road in payments interest free... this makes sense to me but i want to make sure that this is a good investment for me and wanted to get a couple opinions... he profits 80k a year but he doesnt have any payments on any money borrowed because he had the cash to get the bar going.

First and foremost, if you are buying any business that makes <300k, in this case 80, and no possible growth, 1 years net is a fair price, why ? You can work for someone else for 80 a year let him deal with all the problems, a year from now you will still make 80k. Rule of the thumb is 3-4x, some time 5 yearly net, but not when you talk about businesses that generate yearly salary at best.