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4 Replies Last post: Jun 10, 2008 11:37 AM by Adducent

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Buying an existing business...

May 12, 2008 2:02 PM

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Haileysdad 4 posts since
May 12, 2008

I was offered a chance a to buy an existing Auto repair shop. I work some nights and weekend at this shop for extra money and have known the owner for 20+ years. I have been in the buisness for around 20 years, Ford master tech, as well as Ford Master Service manager. I have 10 years in managment with automotive shops as well.
The shop I was offered does approx 40,000 a month gross, about 55-60% profit, has been in same spot for 12years and same owner since conception. I have the chance to take over everything including customer base and name. I will be needing between 200,000 to 250,000. which can be paid back with interest over 5-7 year term. The final number isnt here yet, we are still putting monetary value to all equipment and inventory.
The owner said he will finance me at 8% interest, but I am a little leary mixing friends and money.
Any advice or help would be greatly appreciated.. Thanks to all.
Eric

Tags: loan_to_take_over_business, alternate_financing_options, small_business_loan Report as inappropriate

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LUCKIEST 5,749 posts since
Aug 6, 2007

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1. Re: Buying an existing business... May 12, 2008 2:16 PM

Buying an existing business, Welcome and good luck

*It is great that *you work at this shop and have known the owner for 20+ years in Ocala.
Do you have an accountant to review priors tax returns and books and records??
A Lawyer for the closing?? An Insurance Agent?? Would like to see a Cash Flow Statement
How many people on Payroll?? Do you have a reliable back office (bookkeeping)??
When will you have final numbers??

Good luck, LUCKIEST

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Haileysdad 4 posts since
May 12, 2008

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2. Re: Buying an existing business... May 12, 2008 2:36 PM

in response to: LUCKIEST

I will have an accountant look at all the books, he will provide me with any and all info needed, my wife works at a Mortagage company so one of her friends(co-workers-lawyer) will be going over all paper work also. At this time he has 4 plus himself on payroll, 2 full time mechanics, a general guy that does oil changes and such and 1 person writing repair orders. I will be eliminating the repair order person 2 months after I take over and my wife will handle all office and bookeeping duties. I will see about cash flowstatement. I should have final purchase price within 1 to 2 weeks. Not sure about insurance agent, but his buisness insurance is with the same agent I have for my home-owners policy and cars and boat, so any info about that should be really easy to get.....

Thanks for the quick response...

Eric

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Haileysdad 4 posts since
May 12, 2008

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3. Re: Buying an existing business... May 14, 2008 8:39 AM

in response to: Haileysdad

OK the only news is that we have settled on 250,000.00. I should be getting the last 3 years tax returns very shortly, and I have talked to his accountant about cash flow statements.

So if there is any other help out there, I need it.
Very High profit business can pay very good % rate loan in 7years or sooner...

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Mogul

Adducent 204 posts since
May 22, 2008

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4. Re: Buying an existing business... Jun 10, 2008 11:37 AM

in response to: Haileysdad

Hi Eric,

I hope at this point you are well on your way to closing your acquisition. I just spotted your post and something that may help you (and the seller) to make it more comfortable with the business seller carrying back any financing can be found at: http://www.virginmoneyus.com. They provide professional services specifically where individuals are providing financing for a buyer. When I read over the site it seemed a great service and of benefit to both individual buyers and sellers. Perhaps they will be of benefit to you as well.

Dennis Lowery
Adducent, Inc.

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