.jpg)
The Restaurant Realty in 10
The Restaurant Realty in 10
| I Want to Sell My Restaurant. Now What?
When you have decided that you would like to sell your restaurant business it can be daunting to know how to begin the process and what information will be most important to a buyer.
Today on The Restaurant Realty in 10 host, Michael Carro, walks you through the documents you should prepare and give to your restaurant or business broker. Being prepared with the right data can get the right buyer exactly what they need to make a decision and avoid delays and lost deals.
For more information on The Restaurant Realty in 10 or to get the show notes from today's show head over to TheRestaurantRealty.com
Subscribe to get new episodes that provide uncensored straight talk geared to answer your restaurant and restaurant real estate questions.
Welcome to The Restaurant Realty in 10. Ten minutes of uncensored straight talk for restaurant entrepreneurs twice weekly The Restaurant Realty in 10 dives into restaurant operations, facilities, real estate and investments.
Michael Carro :Welcome to The Restaurant Realty in 10. I'm Michael Carro, your host. And today we're going to talk about how to sell your business. Specifically the type of paperwork you should get together for your business broker or restaurant broker, so they are prepared to go out to market full steam ahead.
Michael Carro :The primary thing is no broker should ever go out with partial information. This puts them at a significant disadvantage, and many times they have one chance to get a deal done and you don't want to be waiting on information that can be sometimes challenging to get. So today I'm just going to talk about the step by step items that are needed so you can prepare in advance of your conversation with your restaurant or business broker.
Michael Carro :The first thing is, is you're going to need to assemble a large volume of financial information a minimum of your last three years tax returns, your last three years profit and loss statements. I personally like p&l with the percent column. This lets a buyer know in advance areas of improvement that they believe that they can put immediately into a p&l. A year to date p&l if you happen to be in the middle of the year, your latest balance sheet, but they may also want to see balance sheets from the last three years, December 31 of each year, provide a lot of information.
Michael Carro :Your attorney and your CPA are also going to be very important to the transaction. So getting their contact information name, phone number, email address for both of those folks will be very important. Also contact information for your bookkeeper. And the type of software that you use to manage your restaurant whether it's QuickBooks, Quicken or some of the software that can easily be used and translated into somebody else's system.
Michael Carro :Insurance policies, your insurance agent, of course, and then each policy whether it's General Liabliity, flood contents, wind E and O's, errors and omissions, life or key man insurance, any other types of insurance that you may or may not have. Do you have any insurance claims outstanding, so put together a list of any liabilities that may be out there.
Michael Carro :The next group of documents that will be needed will be a lease or if you own the building how you plan to move forward with that building. If you own the building, you may determine that you want to lease the space in which case we need to back into the lease rate and the triple net. Triple Net is the property taxes, property insurance, and common area maintenance fees. In addition, are there any outstanding lawsuits? Are there any unique licenses required to operate your business? Each state has a different set of criteria. So having as much information, and copies of your permits and licenses will be helpful and what entity those licenses are issued by.
Michael Carro :Obviously, your p&l is going to have your payroll. And so diving into your payroll is going to be very, very important. Who are your salaried managers? What are their roles and responsibilities? Who are your hourly employees? Are any of them key to the business, any type of information you can put on your employees, their names, their positions, how much time they've been with the company and their current salary and wage will be very important. And then are there any benefits that you provide to any or all of your employees that the new buyer would have to assume?
Michael Carro :Another important factor is why you're selling the business. If you're writing up a business summary, your roles and responsibilities that you currently play in that business that would have to be replaced with another owner or employee will be helpful. People sell businesses for a variety of reasons and don't be embarrassed or shy about what your reason is. It could be that you don't even enjoy the business anymore. That's okay. It could be that you've been doing it for 30 years and you want to retire, or just do something different. But having a summary of why you're selling is very important to a lot of buyers. So put some time and effort into that.
Michael Carro :I like to get into some granular details that are not going to be in the offering memorandum, but are questions that will come up later. Such as what type of POS system point of sale system does your company use? Is there a transfer fee that the host company will be required for somebody to pay, whether it's the buyer or the seller, and what is the brand and software that's used. Also, you'll need to provide a complete vendor list and what products and services they provide. It's also helpful to know if there's actually a contract or if it's simply month to month.
Michael Carro :We also want to provide a complete equipment list, identify any leased equipment and provide details on that a lot of times restaurants lease their dishwasher, and so providing the details of that lease will also be helpful. At the same time. You'll want to identify any equipment that is not included in the sale are any personal items that may be family heirlooms that may be part of your decor package that you will not convey as well. Writing a complete copy of the menu, whether it's a breakfast, brunch, lunch, dinner menu, late night menu, cocktail menu, anything that has to do with your service would be fantastic to provide to a buyer.
Michael Carro :Are you part of a franchise system? If yes, then what are your territory rights? How much is the royalty for your business? What is the marketing fee that's required? Is the business in compliance with the franchisor? Is that business compliant with the current decor or remodel requirements? Is there a franchise or transfer fee? And if so, how much is it? Is there a training fee and then franchise or contact information will also be helpful?
Michael Carro :As you dive into each of these questions, you'll uncover numerous other things that will be included in the information that will be provided to a prospective buyer. Make sure that you hire a broker that has sold a lot of restaurants as I have found that restaurants are quite unique to the business world. You can visit my website for this complete list of requirements that you will provide to your restaurant broker. Thank you and we'll talk to you next time.
Michael Carro :Thank you for listening to The Restaurant Realty in 10. If you're interested in restaurants, whether operations, facilities, buying, leasing or investment, The Restaurant Realty in 10 is for you. Please subscribe to this podcast and you can also visit The Restaurant realty.com for show notes, topics and additional information.