We had a willing and motivated seller and buyer for two upscale retail women's stores in 100% locations - SF high traffic upscale "designer" street location and downtown Mill Valley. The buyer needed financing to get the transaction closed.
Challenge was the seller had tax returns for the last three years that showed a loss because her returns involved four separate businesses. For the last three years one of the seller's businesses showed a major loss that cancelled out the profits from the two retail stores. In addition the costs on the "books" of the retail stores had costs that were "burdened" from the other non-profitable operations the seller owned.
Solution was to work with a financing resource, the seller's accountant and the seller to "normalize the costs" for the last two years based on the current cost structure of the stores. In addition, we took the revenues and costs of goods directly from the POS systems at the stores and combined this with the help of the accountant into a P&L that showed profitability and allow the SBA to approve a loan that provided the buyer the opportunity to purchases the stores for less than 20% down.
The accountant need to produce "compiled" financials, Balance Sheets and Profit and Loss Statements that were on his letterhead and conformed to common format that the lenders underwriting group validated and approved of to get the deal done on this multi unit business.
It was a team effort and a win for both parties!
This selling a business tip was provided by:
George Arabian at VR Business Brokers of San Francisco, California.
Posted on February 6, 2007 | 
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