Recently we ran into a situation in which we had a qualified buyer to purchase a distressed business which was about to close down due to extreme financial stress on the business. The business is owned by 4 partners with no real management experience in the restaurant field. They were behind on the bank payments, SBA payments, Federal withholding, Real Estate Taxes, Utilities, just about everybody.
Employees were dropping like flies and sales were down by one half. These guys are in real trouble. The good news is the buyer already owned 4 successful restaurants and was looking to purchase another. The bad news is that because he had recently just completed a $1,000,000 deal through us, the bank wanted to wait another 6 months before they were going to lend him more money for another purchase.
First I contacted the bank that was in default and set up a meeting with them and the buyer and the sellers. I wanted to know if my buyer could make payments directly to them to prevent any kind of foreclosure. The bank was very receptive. Next I got in touch with the SBA (Small Business Administration) and worked out a deal for the buyer to assume their note and get the sellers off the hook. Then we went to the city to get approved for a liquor license. The city really wanted the restaurant in the community, and liked the buyer. However we needed to come up with the delinquent property taxes to qualify for a liquor license.
The Solution: I drafted a one year lease with an option to buy at a predetermined price. The lease payments covered all the payments to the bank, SBA, and paid the Real Estate Taxes. The Buyer took over the space immediately and started the remodel. He reopened 30 days later to a great response from the local community and terrific sales. The buyer called me the other day and wants to close on the deal earlier than expected.
An experienced broker can help close your sale by coming up with unique strategic ideas that will save money and time.