Café purchase

[lankarocks]

Hi everyone,

My wife and I have had jobs for a long time and we have always been interested in having our own café. My wife had even worked at a local deli for some time to understand the business. So, when a small sized café came up in the market for sale, we immediately made an offer. However, the whole process has been quite exciting but overwhelming at the same time. We have reached a point where there is a stalemate between the seller and our solicitor.

A bit of a background. The seller has an existing company that runs the café. But this company is sort of a conglomerate that runs other things apart from the business. Hence, when our solicitor is asking for the account details for the company, the seller is refusing to reveal that as that would mean provide details confidential to other parts of the company. He has been otherwise cooperative in providing the the sales and expense figures in details. As you might have guessed this transaction only involves sale of goodwill, utensils, appliances, employees (TUPE) and transfer of lease. The sale does not include the company.

Do you think our solicitor is being unreasonable in asking for account details, as technically we are not buying the company? Or is the seller being to protective about his company?

 

[fisicx]

If you can’t have access to the account walk away from the purchase. It’s fundamental to everything.

How do they plan to extricate the cafe from the company? Or are you going to be forever beholden to their wishes?

You need to be totally independent from their business. The only connection should be the lease - which you don’t even mention.

 

[Mark T Jones]

Simply put, if you can't get an absolutely clear picture of the financial position of the cafe,you can't make a realistic offer.

If they are vaguely professional they will have this.

 

[WaveJumper]

Immediately made an offer on "what" if you have not seen the accounts the business is worth nothing. Top marks though for actually having a solicitor, and when you have one its good to listen to them

My advice ......... personally I would be walking away

 

[fisicx]

The way it reads is this conglomerate will still own the cafe. Which means all @lankarocks won’t own anything other than some equipment which will be worth pennies. They will be paying a large wodge for nothing.

 

[BubbaWY]

Does the company own the premises or just the lease?

I can understand their unwillingness to provide trading details for the whole company, given that it includes operations other than the cafe. But that isnt your problem.

What sort of purchase value are you looking at? And, with the figures they have given you, is it making decent net profit?

 

[Socio South West]

My thought is that you were extremely unwise to make an offer without sight of the financial history, unless it is declared non trading and is equipment and premises only.

Your solicitor is right to stick to his guns, and if the vendors are not able to supply this information freely you should walk away: There are usually plenty of similar businesses available - witness the number of times café/restaurant purchase appears on these boards.

 

[pentel]

How were you able to make an offer with zero financial information?

With the liabilities you are taking on (staff, lease, rates, utilities etc) and no idea of turnover, costs and profitability (if any) I would expect the person / company trying to offload this to be paying me to take it off of their hands.

 

[BubbaWY]

How were you able to make an offer with zero financial information?

From the first post..."He has been otherwise cooperative in providing the the sales and expense figures in details."

 

[pentel]

Also from the first post

our solicitor is asking for the account details for the company, the seller is refusing to reveal

 

[fisicx]

From the first post..."He has been otherwise cooperative in providing the the sales and expense figures in details."

Or maybe these were just made up numbers. They could be making a loss and using money from other parts of the company to keep the cafe running.

 

[BubbaWY]

Or maybe these were just made up numbers. They could be making a loss and using money from other parts of the company to keep the cafe running.

Quite possibly. And something which the 'official' accounts wont prove either way.

 

[DontAsk]

OP also stated "and transfer of lease."

 

[HFE Signs]

If you really want to go through with the purchase without full accounts, you are taking a big risk. If they can't give you full accounts, can they give you the last 12 months P&L? They must have some figures to demonstrate the profitability, or are they just hiding that hoping you buy something that isn't doing so well. Be very careful with this

 

[ecommerce84]

When you say “account details” do you mean full profit and loss accounts or do you mean bank account as a means to verify money in and money out.

Assuming they aren’t allowing access to full P&L then I’d walk away.

No one will buy it without being able to see the full accounts so if this is what they are refusing access to then I find it very peculiar. They should have had all of this available prior to listing the business for sale.

 

[Chris Ashdown]

Any company should be able to provide a break down of the sales and costs of any department, inconvenient work for them to dig in and withdraw them depending on their accounting software maybe. they would not be official type numbers but should be a true representative. also you can get the companies figures from many sources just google the company name

 

[WaveJumper]

@lankarocks where are you with this deal now be nice to have an update