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Sale Summary:

Asking Price:  $ 1,250,000 + SAV

Sale Price: $ 1,100,000 + SAV​

NDA: 11

Offers: 1

On Market: 1 month

Key business stats:

Revenue : $ 3,480,000

Ebitda: $ 468,000

Working owners: 0

Lease: 7+5 remaining

Rent: $192,400

Annual increases: 4% fixed

Key staff members: 5

Purchaser finance : No - cash buyer

Plant and equipment: $ 250,000

Goodwill: $ 850,000

Stock: $ 40,000

Conditions precedent: Assignment of lease

Conditions preceding: Training period of 4-12 weeks


Q: How was the buyer found?


This particular buyer came from our personal network. One of the things we like to do once we have taken a business to market, is wait until the business is starting to gain some traction, and then once it has we contact buyers on our shortlist that we think will be interested.

This helps to create a sense of urgency, and separates the serious buyers from the rest.

Our shortlist is a list of buyers we already have a relationship with, so it's really important that we bring these buyers in at the right time. This particular buyer had their offer accepted just 4 weeks into our campaign.


Q: How long did it take to negotiate the price?


Pricing the business fairly plays a really big part in in the negotiating process. Most business brokers will price the business 5-10% above where they believe fair market value is. The logic behind this is that there is some negotiating room for their client. In this instance, when we see a business with a number of key elements such as a lease of longer than 10 years, no working owners, high revenue and low rent of under 7% we like to position the business a little higher. The vendor's target was $1,000,000 so our price strategy paid off. Equally, you do have to be careful not to price the business too high, or you will alienate buyers.

This business was priced at a multiple of 2.67 X EBITDA which is very high for food retail.


Q: What challenges came up?


Every business sale has it's unique challenges, and this business was no different. There were 5 staff that were sponsored and the sale was an asset sale as appose to a share sale, so it took some extra time for the Purchaser to arrange their affairs, and their new entity had to be made eligible for sponsorship's.

Also there was a lot of debt in the balance sheet, so we really had to coach the Vendor on how to handle this throughout the due diligence process.

The natural tendency for a Vendor is to try and hide it though this will always cause more problems, and a buyer will always sense the Vendor's anxiousness and secrecy.

The role of the business broker is to help the vendor convey they facts.


Q: What were the conditions precedent and preceding?


In our view, conditions are always considered in context with the asking price, a business sale is not just about price it's also about fair and favourable terms for both sides. The only condition precedent to completion was the assignment of lease. It was also really important for the buyer to receive training from the Vendor after completion, and we supported the buyer with this request. The Vendor agreed to provide training in the business for up to 12 weeks at the buyers discretion at fair market value.



Daniel Kogan 

(m) 0401 620 918

(t)   (02) 8923 2632


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