Thinking of buying a second location... asking price seems off though!

[prooney82]

Hi all,
I’m looking into another location. Seller has been in business over 15 years and is asking $250k. Gross sales are just over 400k and he’s taking home (salary) $104k/year. I know everyone thinks their place is worth more than it actually is, just looking for outside opinions on this one. Based on the salary, if the sales actually prove true this seems like a deal. Any and all feedback is appreciated!

 

[Rico]

Gross sales are just over 400k and he’s taking home (salary) $104k/year.

That’s basically the whole payroll for one person. Is he a 1 man show? Doesn’t sound right. To start ask for last 3 years P&L’s. Look for sales trend and anything that shows a huge decrease or increase from 1 year to the next or any discrepancies between the years in expenses.

 

[Piedad]

Yeah, 25% net profit sounds too big. Does he own the building and then doesn’t charge the business any rent? Are there employees being paid “under the table” (out of his $104K). His personal tax return will likely tell you what you need to know.