Once again I had a potential business buyer on a gas station in the Northwest who wanted to buy a franchised gas station where the the purchase price was 7X the adjusted net income!
The business broker was adding back rent (the real estate was not for sale) and a bunch of add-backs that lenders usually will not accept like - health insurance, credit card charges (merchant services), accounting fees, etc.
Business buyers need to understand that lenders will only add back the obvious line items like net income, owners salary, depreciation, interest, ammortization and then a realistic purchase price has to be in order otherwise
THERE WILL BE NO LOAN CONSIDERED! Part of the process of buying a business is looking at financials, tax returns etc. Before you waste your time make sure you get a copy of these documents and make sure everything is in line otherwise you won't get financing.
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