Buyout

[joshuabcrutcher]

Say, for example, you have a competitor that has been in business for 5 years. Their net income is $65,000 and ran as a one man show. They have a truck worth roughly $3500 and their trailor has $9500 (wholesale) in it. Income has steadily risen from about $25,000 in their first year. However, 80% of the business is residential. Is that really worth $300,000 to you?

 

[Grant]

Is that really worth $300,000 to you?

No, not even $30,000.

 

[joshuabcrutcher]

What if 80% of it is commercial and contracted? What $$$ would you put on it?

 

[Grant]

A reasonable down payment and 7% of each invoice from existing customers for a period not to exceed 5 years with a purchase cap. Any new customers gained are exempt from the %.

 

[joshuabcrutcher]

Interesting structure... Have you used it before? Who accounts for it?

 

[Grant]

Yes I have and I keep very precise records for accounting and I provided a monthly report with the monthly check to the seller.

 

[joshuabcrutcher]

How do you typically calculate a cap?