Hello, I currently am the owner of a small upscale catering company (legal,insured etc.) I have been searching for a kitchen to lease but have come up empty as far as having a place to call my own....yes I have some church kitchens in the area but find that I can't legitimatly run a business out of them because of all the limitations (meals on wheels, various groups using them). Anyway to get to the point I started looking into buying an existing deli operation. I wanted to get some input/advice on standard business valuation formulas and most importantly working with a business broker. What is the general commission or finders fee paid? I started working with a broker in the area who has a ton of businesses for sale, and has a good feel for the industry (40 years) but don't want to jump into anything.

By Jonesg (Jonesg) on Wednesday, September 01, 2004 - 05:10 pm: Edit

There really isn't any standard that cannot be excepted. My deli/catering business was listed for 125K, but I paid 46K , the broker took 7K of that 46.
Many say 2 times the net but ....net can be slippery to nail down.
The best sales indicator is probably their sales tax reciepts.

The best approach perhaps is to find private sales, look in the classifieds and wait.

By Chefspike (Chefspike) on Wednesday, September 01, 2004 - 07:40 pm: Edit

ditto.
and hire your OWN inspector for things like the electric, plumbing, ect.

By Foodtech (Foodtech) on Thursday, September 02, 2004 - 09:41 pm: Edit

Frank:


Ask to look at his/her books. I would not buy for more than 1.5xs annual sales. If there's a long track record, and it's increasing annually + right market.

By Frankpizza (Frankpizza) on Thursday, September 09, 2004 - 10:31 am: Edit

Thanks for all of your help. I am sure I will be back with other questions as the process goes along