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Estb business purchase finance ( none franchise )

Discussion in 'Property Finance' started by Speede, 25th Dec, 2015.

  1. Speede

    Speede Well-Known Member

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    Established 12 yrs.
    Turn over 1m
    Profit 500,000 before tax.

    Which banks lend for purchase? + deposit required?
     
  2. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    what security?
     
  3. sanj

    sanj Well-Known Member

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    I imagine there are a lot more factors at play. Is it run under management qith solid procesures etc? If its owner operates so u have experience in this field? Pretty high profit margin!
     
  4. 4point5million

    4point5million Well-Known Member

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    What industry?
     
  5. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    ANZ are pretty good in this space

    depending on a million things, I have seen up to 70 % as a cashflow lend on nil hard security.

    ta
    rolf
     
  6. DaveM

    DaveM Adelaide Buyers Agent & KFC Strategist Business Member

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    Is the profit gross or net? Seems high
     
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  7. Speede

    Speede Well-Known Member

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    Profit is gross before tax. Total turn over is 1m-1.1m.

    Real estate industry, business comes with $900,000 worth of assets.
     
  8. Greyghost

    Greyghost Well-Known Member

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    What is the rough purchase price?
     
  9. Speede

    Speede Well-Known Member

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    $650,000.
     
  10. Ace in the Hole

    Ace in the Hole Well-Known Member Premium Member

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    How?
     
  11. York

    York Finance Broker Business Member

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    900k assets and over 1m turnover at 50% GP selling for 650k? o_O

    Are you sure those figures are accurate? Have you sought professional advice from an accountant and solicitor?
     
  12. Scott No Mates

    Scott No Mates Well-Known Member

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    Rent rolls sell for 2.5-3.5 x commission without any property. Not sure on the cost of management rights.
     
  13. Shahin_Afarin

    Shahin_Afarin Residential and Commercial Broker

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    Max 50% LVR (of the purchase price) - ANZ is the lender that will do it. Interest rates are going to be 10%-11%.

    What you will need is:

    1. Projected Cashflow Analysis (prepared by your Accountant)
    2. Business Plan
    3. Your CV and background
    4. Last 2 years company financials of the business you are purchasing

    Bank of Sydney has do it but their offering isn't as strong as what ANZ can do.
     
  14. Speede

    Speede Well-Known Member

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    Is 70% impossible?
     
  15. Shahin_Afarin

    Shahin_Afarin Residential and Commercial Broker

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    Possible yes - likely no.

    You need a strong business case and profile to go to 70% unsecured.

    If you need to fund equipment you can do this separately via equipment finance.
     
  16. Speede

    Speede Well-Known Member

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    Business has over $900,000 worth of assets can this help in achieving 70% ?
     
  17. sanj

    sanj Well-Known Member

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    A business supposedly making profit(whats the net profit) selling for 30% less than net assets alone are worth?

    I suspect u dont have the full story
     
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  18. Speede

    Speede Well-Known Member

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    Financials audited by an independent accountant.
     
  19. pinkboy

    pinkboy Well-Known Member Premium Member

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    What are the assets?
    Who valued the assets?
    Have you seen several tax returns showing significant tax paid, or high explained deductions?
    How long on the market has this business been?
    Is the business for sale or the shares in the company?
    Dependant on the above answer, have you seen a balance sheet?
    Is the business/company under any legal duress?

    Multiple of .5 is a big red flag for me. Why is it being given away? With free cashflow like that, it could be managed comfortably and set and forget for the owner.

    With a little probing, I bet you will find the skeleton.

    pinkboy
     
  20. sanj

    sanj Well-Known Member

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    Have u looked into why it is being sold so cheaply? Do they need a quick sale/settlement? Any extenuating circumstances? Can these assets be sold easily and replacements rented? If all checks out you should consider buyimg the business, flogging off all the assets and being 200-250k in front before doing any real work.

    Doesnt make sense to me though.
     
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