Thanks everyone for the input. Just to answer a few of the questions.
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Originally Posted by Sample00
I would concur with much of the sound advice already posted.
I would probably ask to see some financial statements. And definately make sure that not all the establishments are amalgamated into one statement. You will want to get a true representation of what your particular bar is doing.
I would hate to say this but if it is in fact a "money maker", why would he be thinking of unloading it. Most entrepreneurs are unlikely to cast off a money maker.
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I have the P/Ls from the past 5 years and the have for the most part been trending up. The seller, who is also an acquaintance of mine that I have done other business with, is probably what you would call a serial entrepreneur. He started a company and eventually sold it to a major Hollywood studio for a few million dollars, then moved back home. That is how he got his start. Sometimes people do sell "money-makers". In this particular case, he started up a major establishment and runs another franchise for it under a different concept. He has been having trouble managing all 3 and well as his family obligations (dude has 4 kids under the age of 7). The establishment he is selling was the first he bought, but it wasn't his concept. The two that he is keeping are his concept and his "babies" so to say. He said that he can no longer spend 40% of his time at the 3rd location without hurting the other two. He is also franchising his concept out and so the one he is selling has become a "3rd wheel".
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Also, your investment into this venture is going to need to be substantial. Most financial institutions are highly unlikely to step into the hospitality industry because the mortality rate is so high. I would be cautious if he is willing to carry all or most of the financing. It would throw up another red flag as to why he is selling the business. If he is wanting to inject cash into the other two establishments, why would he offer to carry any financing?
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We have enough to do it without financing (although we are still going to try for it, because why spend your own money). I have hired a consultant to to help with the bureaucracy.