10 Commandments for
Selling a Restaurant
Selling a Restaurant
| Here's some "Thou Shalts" and "Thou Shalt Nots" for selling your restaurant |
1. Thou SHALT Price realistically. Don't overprice or under price your business. A
high price discourages qualified buyers and many buyers will not make you an offer for fear
of offending you. Over-priced businesses are on the market for a longer time. This
increases the chances of your employees, suppliers or customers discovering that you are
selling. This can cause employees to leave and suppliers to put you on COD.
2. Thou SHALT Prepare a professional business offering package. Include the
information that buyers need to see; i.e., leases, equipment lists, copies of menus, profit &
loss statements and income tax returns. If you have poor books & records, then you need to
IMMEDIATELY start recording sales and expenses. You will have to prove these to a
buyer. Buyers will become suspicious and lose enthusiasm if they have to wait for your
basic information.
3. Thou SHALT NOT fail to bring the deferred maintenance up to date. Prior to
putting the business on the market this is highly recommended. When buyers see items that
need fixing then they often wonder about the condition of things they can't see. Sometimes
the smallest detail will turn the buyer away.
4. Thou SHALT Prepare a purchase agreement form prior to finding a buyer. You
should be prepared from the beginning to take an offer. If you do not have a purchase
agreement, then hire a professional business broker or attorney. You need to make it easy
for yourself and the prospective buyer to receive/make offers when you have a deal.
BEWARE: Attorneys are sometimes slow in drafting agreements and you may lose a buyer's
enthusiasm if the purchase is delayed.
5. Thou SHALT look for a buyer in as broad an area as possible. Don't depend
only on websites to produce leads. Depending on your restaurant concept, price and financial
records, you may be reaching a fraction of the target market. The way to get the optimal
price is to have as many qualified buyers as possible. Consider using local newspapers and
direct targeted mailings. A high volume or high profile restaurant may warrant national
advertising in various medias.
6. Thou SHALT "Qualify" potential buyers immediately. You need to know about
the financial strength and business skills of an interested buyer before you give out
confidential information on your business or spend a lot of time with them. Generally,
restaurants should be sold to experienced restauranteurs.
7. Thou SHALT NOT Fail to Confirm your leases. Make sure your location and
equipment leases are transferable before you look for a buyer. The number ONE reason
deals fall apart is because the landlord will not approve a new owner. This is often a
‘profit’ opportunity for your landlord. If your remaining lease term is short, negotiate a
new lease prior to offering the business for sale. If you do not do this, the real estate
owner can lease the property themselves and reap the benefits of your hard word.
8. Thou SHALT Get everything in writing. Make sure that every agreement of the
transaction is clearly stated in writing, including all contingency removals and equipment
lists. People quickly forget what was said and not written which frequently leads to
arguments and then lawsuits.
9. Thou SHALT Get a good faith deposit when you have reached agreement with a
buyer.
10. Thou SHALT Follow correct procedures. Most restaurant sales involve some
aspect of seller-financing or escrow after the sale closes. If you are financing part of the
sale, use an escrow company or attorney to ensure that correct procedures are followed.
This includes UCC/lien searches, completing any necessary filings in your city/county/state,
security agreements, etc.
high price discourages qualified buyers and many buyers will not make you an offer for fear
of offending you. Over-priced businesses are on the market for a longer time. This
increases the chances of your employees, suppliers or customers discovering that you are
selling. This can cause employees to leave and suppliers to put you on COD.
2. Thou SHALT Prepare a professional business offering package. Include the
information that buyers need to see; i.e., leases, equipment lists, copies of menus, profit &
loss statements and income tax returns. If you have poor books & records, then you need to
IMMEDIATELY start recording sales and expenses. You will have to prove these to a
buyer. Buyers will become suspicious and lose enthusiasm if they have to wait for your
basic information.
3. Thou SHALT NOT fail to bring the deferred maintenance up to date. Prior to
putting the business on the market this is highly recommended. When buyers see items that
need fixing then they often wonder about the condition of things they can't see. Sometimes
the smallest detail will turn the buyer away.
4. Thou SHALT Prepare a purchase agreement form prior to finding a buyer. You
should be prepared from the beginning to take an offer. If you do not have a purchase
agreement, then hire a professional business broker or attorney. You need to make it easy
for yourself and the prospective buyer to receive/make offers when you have a deal.
BEWARE: Attorneys are sometimes slow in drafting agreements and you may lose a buyer's
enthusiasm if the purchase is delayed.
5. Thou SHALT look for a buyer in as broad an area as possible. Don't depend
only on websites to produce leads. Depending on your restaurant concept, price and financial
records, you may be reaching a fraction of the target market. The way to get the optimal
price is to have as many qualified buyers as possible. Consider using local newspapers and
direct targeted mailings. A high volume or high profile restaurant may warrant national
advertising in various medias.
6. Thou SHALT "Qualify" potential buyers immediately. You need to know about
the financial strength and business skills of an interested buyer before you give out
confidential information on your business or spend a lot of time with them. Generally,
restaurants should be sold to experienced restauranteurs.
7. Thou SHALT NOT Fail to Confirm your leases. Make sure your location and
equipment leases are transferable before you look for a buyer. The number ONE reason
deals fall apart is because the landlord will not approve a new owner. This is often a
‘profit’ opportunity for your landlord. If your remaining lease term is short, negotiate a
new lease prior to offering the business for sale. If you do not do this, the real estate
owner can lease the property themselves and reap the benefits of your hard word.
8. Thou SHALT Get everything in writing. Make sure that every agreement of the
transaction is clearly stated in writing, including all contingency removals and equipment
lists. People quickly forget what was said and not written which frequently leads to
arguments and then lawsuits.
9. Thou SHALT Get a good faith deposit when you have reached agreement with a
buyer.
10. Thou SHALT Follow correct procedures. Most restaurant sales involve some
aspect of seller-financing or escrow after the sale closes. If you are financing part of the
sale, use an escrow company or attorney to ensure that correct procedures are followed.
This includes UCC/lien searches, completing any necessary filings in your city/county/state,
security agreements, etc.
MegaBite Restaurant Brokers
 |
 |
 |
 |
 |
 |
 |
 |
 |
 |
 |
 |
 |
| email us: CLICK HERE or send to: info@MegaBite-RB.com call us: 214-405-0385 |