Option A BUSINESS With Motivated Seller? - Posted by Hugh
Posted by Hugh on July 05, 2002 at 14:23:12:
Today I found a very motivated seller…but it’s not a real estate he wants to sell. However, I was thinking that the same principles I’ve been learning about here (i.e., options) could apply in this situation, and I would appreciate any and all feedback. Is this a good opportunity, or a “Forget it!”
It’s a small sheet metal manufacturing business that grosses about $600,000 per year. Inventory and equipment are worth about $150,000. Cash plus receivables add up to $200,000. The yearly net is probably somewhere between $100,000 to $120,000. The business is about 15 or 20 years old, with 3 or 4 full time employees and an outside bookeeper. It is definitely a going concern (always very busy with work — I know, they’re one of my suppliers for my own businss).
The owner wants out NOW (he’s in his late 50’s, and he hates being there every day), and he’ll walk for $350,000 — the value of the cash, receivables, inventory and equipment. In other words, nothing for the business itself.
On the surface, this sounds like something that can be optioned and sold for a profit. Any advice?