Hey RICHMOND!!!Do you love supporting LOCAL businesses and organizations?That's what I love MOST about my job. I’ve been in the commercial real estate and brokerage world for over 15 years. I get to help local businesses and organizations find a place to call home right here in Richmond. In fact, here are my TOP 5 Favorite Projects:#1) Flooring RVA.We helped find them a new showroom with more space AND we were able to help find a tenant to replace their previous lease so they could make a clean break.#2) The Summit (Scott’s Addition area).Such a great, action packed area of town where we were able to help long time friends sell two different properties at the same time.#3) Nomad Deli & Catering Company.Anthony and his family are proof that the American Dream is alive. They started this family owned business as tenants, but eventually bought their building and have continued a successful (and delicious) restaurant!#4) LUX ChurchThis is a great community minded organization that brought life back into a building that was over 130 years old and an area landmark.#5) Liberty Public HouseWhen Alexa told us about her dream concept of a restaurant inside a renovated, historical building, we knew we had just the right property for her! In fact, she moved all the way back to Richmond from the west coast to fulfill her dream of being a restaurant owner.
Posted by Sperity Real Estate Ventures on Tuesday, June 30, 2020
From the IBBA’s website: “A Certified Business Intermediary (CBI) is an experienced business broker who is committed to the highest level of professional development the industry has to offer and has ethical values aligned with the IBBA standards of professionalism. A CBI has the ability to objectively guide clients through the intricacies of the entire marketing and negotiation process of a business sale, resulting in successful transactions and satisfied clients.
A CBI offers the most experienced professional representation available during the process of selling or buying a business. Along with having undergone a specialized initial program of detailed training, a CBI is required to earn continuing education credits to maintain the credential.
When you want to work with the best intermediary to buy or sell a business, look for the CBI designation.”
There has been a lot of attention given to the recent closings of restaurants in the Richmond area. There have been a lot lately, no doubt — here is a list of closings this year from Richmond.com that they are keeping up-to-date as things change. Some of these have been big surprises to the community at large, but it is important to keep in mind a few things.
Not all businesses close (or are for sale) because of poor sales. There are a variety of reasons:
- personal issues (divorce, wanting to spend more time with children, need to take care of an elderly parent, the owner has an illness)
- the business strategy has changed (the owners no longer want to be in a particular area of town, the owners only want to operate where they own the building)
- the owners are absentee and have other full-time jobs that are suffering because of the demands of owning a restaurant
- the business is on track to make a profit but the owners have run out of operating capital
- the owner is burned out, having spent the last XX number of years in the same location
- the owners realize that the best time to sell is when business is booming — cash out while things are good and maximize the sales price
- poor money management — sales might be great, but if you don’t manage your money well then you won’t stay open for long
- the landlord isn’t willing to renew the lease — maybe they have a better offer from another prospective tenant
- the owner isn’t changing, but they are changing the concept
There is also the counterbalancing effect of new restaurants opening up. Karri Peifer, Editor and Food Writer at Richmond.com, has been keeping track:
— Karri Peifer (@KarriPeifer) October 12, 2012
Almost one year ago, we posted a story about the transitioning of ownership of one Richmond restaurant legacy, Mulligan’s Sports Grille. The past month (Tuesday, October 9, 2012, to be exact) has unfortunately brought us the end to this story — covered here by CBS6 and here by Richmond.com. The restaurant’s official statement from their website is posted here (click the photo to enlarge) –>
Another restaurant that has gotten a lot of press coverage for its closing is Cafe Diem, at the corner of Patterson Ave and N Sheppard St in the Museum District — and right beside our office at 604 N Sheppard St. Since our company is involved in the ownership and management of their building, and most of the commercial property in the area, the media turned to us for some insight.
NBC12 coverage of Cafe Diem closing (with video and a guest appearance from yours truly)
I think the press has done an excellent job with the coverage on this closing. It is often a touchy subject, not only for the restaurant owner(s) but the landlord, the restaurant employees, the loyal patrons, the restaurant vendors, and even the surrounding businesses.
In short, there are lots of reasons why restaurants close. Sure, times are tough all around and lots of people are cutting back on spending, but that doesn’t tell the whole story. If anything, if you enjoy a particular restaurant, be sure to visit it plenty and enjoy it while it’s here. It is fun to always look for the next big thing, but don’t forget about the old favorites either. — By the way, there are LOTS of new restaurants coming soon. Keep an eye out here for announcements!
Just two decades ago, sports bars weren’t very common. This is a community story for locals and sports fans, about one of Richmond’s first sports bars, the changing city landscape around VCU and the retirement of one well-respected business owner.
One Richmond bar scores big and creates a legacy
While the city hosts numerous restaurants and acclaimed cuisine, we also have an often overlooked local sports bar–not a big chain–that’s worthy of a boisterous hurrah.
Mulligans Sport’s Grille first swung open its doors in 1990 to reveal about 20 televisions inside–none of them flat screens–all broadcasting sports games and commentary.
Think about that novelty. The playing field for sports bars used to be fairly empty of any competition.
Harken back to the early 90s, if you can. The daily routine was sans internet, cable television was not a household standard–and it certainly did not supply the multiple sports networks available now. There was an audible welcome from sports fans–to the extent that the dream of three men multiplied into six restaurants.
The first store was so successful that by its second year, the bouncers came to work before the waitstaff. They were needed to control the the crowds who would try to push inside when the waitresses arrived, as to stake early claim to the best seats in the house. The Wednesday concert series brought thousands to Innsbrook, and hundreds would just camp out at Mulligans, many taking in the concert from the comfort of the patio.
John Sweeney, along with the Hurley brothers, Mark and Matt, were experimental business owners. They tried off-the-wall things like “cook your own steak” night, where hot grills stood ready for the sports aficionado to meet tong to meet steak.
The investors ran with their game plan, opening a total of six locations. After the Innsbrook location came Mulligans in Mechanicsville, Sixth Street Market Place, Southside, the Fan and then Farmville.
There was a rumor floating around for the past few weeks that Amy Cabaniss, the owner of Julep’s in Shockoe Bottom, was purchasing the building where Davis & Main operated a long-standing restaurant for decades. There was good reason for the rumor, because it was true!
Amy closed on the deal to purchase the real estate and the equipment at 2501 West Main Street this past Friday afternoon. Richard Holden, Principal Broker at Bandazian & Holden, represented Amy in the purchase.
It has been on the market for some time. Fan of the Fan reported back in June that the restaurant had closed, and I know that it had been for sale for some time before that. We are proud that Bandazian & Holden was part of making this sale happen, and even more proud that such a fine restaurateur will be the one taking over.
The new restaurant will be Mint New Casual Cuisine. From all of the great ideas that I’ve heard from Amy and from the reactions I’ve heard so far from the neighbors, the Fan District will be very happy to have her there!
Congratulations on the purchase, Amy! I can’t wait to try out the new place!
As you may have noticed, we have Cafe Gutenberg for sale (see the big “Cafe Gutenberg – FOR SALE” in the menu above, or just click here). It’s a little bit of a different situation than normal, since usually these matters are highly confidential and even to find out the name and address of one of our business listings you would have to go through a screening process and commit to a Non-Disclosure Agreement.
In this case, the owners had decided to be upfront with their staff and even agreed to do an interview with Style Weekly about their decision to sell. Unfortunately, the article published didn’t accurately portray how the owners of Cafe Gutenberg feel about Shockoe Bottom or what they said about their reasons for selling the business.
Jason Guard, aka @rvafoodie, has given Chef Jen Mindell a chance to tell her side of the story as to why she and her partner are selling the business and to provide some background on how the past few years have been in Shockoe Bottom. Check out her guest post on Jason’s blog, Caramelized Opinions.
Business owners often wear many hats: Manager, Worker, Bookkeeper, Janitor, etc. Many owners can do well at all these tasks because they all pertain to their business. In many small businesses, the owner has a lot of proprietary equity; the business is truly the owner’s “baby” and they understand it from every angle. So often, when the decision to sell their business has been made, they are not sure how to proceed or have unrealistic expectations; they may talk to their CPA or other advisors and some may elect to attempt to sell it themselves. Sometimes this is because they are not aware there are any other options. Sometimes it is because they feel that they can do a better job than anyone else since they know their business so intimately.
However, the decision by an owner to sell their own business may be one of the largest missteps of their career. Why? Selling a business is much more complicated, involved and typically much more important than selling a house. Yet, imagine that you wanted to sell your home yourself without using a Realtor. You may know your house better than anyone, so it may seem a logical decision. But do you know what it’s really worth in today’s market? Do you know how to market it to as many qualified potential buyers as possible? Should you get an offer, do you have the experience to negotiate on your own behalf to get the most amount of money possible? Once agreed on a price, can you assist the buyer to assure proper financing is attained and keep the deal moving forward? Finally, even if you answered yes to any of these questions, can you afford the time it would take to complete this process? How much would this time really cost in terms of your productivity? Well, just like a house, you can ask each of these questions about your business and whether taking the sale into your own hands would really be to your benefit.
Fortunately for you, there is a better and easier way to sell a business that will typically result in a higher sale price, a faster close and require much less stress and time on your part. Chances are, there is a qualified business intermediary or ‘business broker’ in your town who, like a real estate agent, can properly price, list, market and sell your business. Selling a company confidentially is a complex and intricate process. A professional business intermediary will be able to handle every aspect of the sale cycle and keep the transaction moving forward through each step.
Services that a business intermediary will perform on your behalf will start with an evaluation of the business and an appropriate, professionally determined sale price for the company. A business intermediary will base the price on several pieces of information including the financial health of the business, demand in the marketplace for businesses like yours, condition of the assets, depth & strength of management, customer diversity, growth potential, and current industry sales trends. You may have heard that it’s as simple as a multiple of profits/EBITDA, but it’s really far more complex than a simple multiple to get the most appropriate (and often most lucrative) price and best terms (contrary to what you may hear in Wall Street, very few businesses sell for all cash).
Once an acceptable sale price or range is determined, the business intermediary will create a Confidential Business Summary about your business. Depending on your industry, this may include an Executive Summary of the business, management organization chart/personnel descriptions, facility specifications, sample marketing pieces and a summarized financial statement along with tax returns and/or other financial documents to verify the numbers. When completed, this will be the primary document to introduce the business to prospective buyers after they have signed a Non-Disclosure or Confidentiality Agreement.
This brings us to another great aspect of a business intermediary: Confidentiality. This is extremely important. Every time your business intermediary locates a potential qualified buyer, before disclosing any specifics about your business (including its name), they will have the prospective buyer sign a Non-Disclosure or Confidentiality Agreement. The document will cover many points including restricting the buyer from discussing with anyone that your business is for sale, and not allowing them to speak to or solicit your employees. This document protects you and your business.
Now that the business has been evaluated, a sale price determined and a Confidential Business Review Package created, your business intermediary will begin marketing the business. Finding prospective buyers, especially qualified ones, is one of the largest challenges to selling any company. Business Intermediaries will use a variety of methods to find qualified buyers. Methods that they will use depend largely on the industry your company is in, the size of the business and the geographic area that the business is located in. Some marketing channels may include working with buyers that the intermediary already has a relationship with who are looking for a business like yours; utilizing online resources made specifically for intermediaries to advertise the company to buyers looking for a business in your industry and price range; and using direct marketing methods to target synergistic or strategic buyers or other existing businesses that your company may fit in with. These are just a few broad avenues for marketing and successful intermediaries have their own proprietary ways of successfully finding qualified buyers, all of which are conducted discreetly and confidentially.
Once a serious, qualified buyer is found, your business intermediary will be there to work with you on negotiating the final purchase price and terms. These are often put into a Letter of Intent that will serve as an outline to the final Purchase Agreement. Ideally, the intermediary can generate multiple potential buyers and create real or perceived competition for the business. This tactic can often result in improved price and terms. Business intermediaries will often assist the buyer in finding financing sources and may have your business pre-qualified with an SBA lender if appropriate. An entire article could be written on financing alone, but suffice to say that an intermediary’s relationships and ability to work with various financing sources (banks, equity firms, private lenders/investors, etc.) is among their greatest assets to you and will open many doors to buyers in need of funding to complete the transaction. Finally, the intermediary will be with you through closing and will have helped to put together a plan between you and the buyer to ensure a smooth, successful transition and continuation of the business.
So for all the expertise, time saved and top sale price and terms attained, what does it cost to sell your business through an intermediary? Typically, business intermediaries are paid a fee which is typically a percentage of the sale price. Many intermediaries will also ask for a small fee upfront. This helps partially offset their costs in business valuation, marketing and advertising while also showing your seriousness and commitment to move forward with a transaction. The upfront fee may or may not be credited to the final fee upon the sale. In most cases, the sale price that a business intermediary can negotiate for your business will be higher than what a sale-by-owner transaction would bring, even after taking their fee into account; this is due to their knowledge, expertise and by maximizing leverage in the negotiation process. [By the way, as of 12/14/10 (and the foreseeable future), we have never charged an upfront fee here at Bandazian & Holden! – NVH]
For many small business owners, the sale of their business is one of their most critical life events; that may only happen once in their lifetime. Having the assistance of a focused professional to manage and lead you through the process all the way to the closing table can make a huge difference in insuring the outcome is consistent with your goals. We hope that you will consider meeting with a business intermediary to discuss your specific company and goals. A good and reputable intermediary will never charge you to discuss your options. We hope that you have found this article helpful and informative. The Carolinas-Virginia Business Brokers Association and its members are dedicated to serving our industry with the utmost integrity, loyalty and customer service.
This article was prepared by the CVBBA for the purpose of assisting clients and their advisors in understanding the appropriate role and benefits of utilizing a business intermediary to facilitate the successful ownership transition of a small business. The reader has permission to copy and distribute as desired. For further information please go to www.cvbba.com.
Every once in a while a potential restaurant buyer will ask me about how any past ABC violations may affect the ABC licensing of a new establishment. Here’s a fairly extreme case, but an important lesson to learn (from a RTD article last week, “Former Velvet strip club site can’t sell alcohol“):
Under state law, the ABC Board may refuse to allow a hearing on a license request if a license for that location has been refused or revoked within 12 months.
“It is enforcement’s position that without a significant period of time separating the Velvet reputation and clientele from that location, the reopening of a similar establishment will contribute to the reoccurrence of the same issues dealt with in the Velvet hearing,” said Francis J. Monahan, director of the law-enforcement bureau.
Oh…what’s the lesson you say? Don’t mess with the Virginia ABC board! You may not agree with them and it may suck sometimes, but you have no choice but to play by their rules if you want to remain in business.
(I wrote about Sam Moore’s ongoing ABC issues a couple of years ago, too: “Poor, poor, strip club owner…“)
The short answer is: “hard work”!
Long hours and a passion for the business are all key to the success of a restaurant. I always tell prospective buyers that are new to the business that it is not just a career, it’s a lifestyle. If you can’t throw yourself entirely into the job, you might want to consider another job.
Take a look at this recent article in the Richmond Times-Dispatch about a day in the life of a restaurant owner, “Hard work keeps fledgling pizzeria going in Henrico“.
The current issue (1/17/07) of Style Weekly has an article in the Food & Drink section called "Fire in the Belly" that I suggest everyone should read. Go ahead, read it and then come back here. (come on, it’s not THAT long)
Every time there is an article about a business changing hands, usually restaurants, the business broker isn’t mentioned. This isn’t an issue of vainity in wanting to get press coverage, but merely a business matter. I have said for the past couple of months that every time a high-profile restaurant is reported as being sold and we are not mentioned, it just perpetuates the myth that most business sales are made without broker involvement.
The article is right on track about how this activity tends to happen
very quietly — discretion and confidentiality is almost always a
concern with businesses that are currently in operation.
I will be doing periodic press releases for completed business sales going forward, and will put these press releases up as posts here, as well. This article is a great start!
There will be a follow-up posting here to go into some of the other details mentioned in the article, so keep an eye out for it!
Seth points out some valuable insights for anyone that sells to a target market of consumers that are making a "once in a lifetime" purchase. (i.e., a DJ for a wedding, or a Realtor that deals primarily with first-time home buyers)
At first, I thought I would be pointing to this mainly for the benefit of other Realtors, obviously with the first thought coming to mind of how I deal with first-time buyers and sellers of businesses and real estate every day. Then I realized that beyond my bubble there are industries that deal with this "naive" type of customer every day, too.
Now "naive" in this sense is not meant to put down anyone, it’s just to acknowledge the experience level of your target market.
Wedding vendors are a great example of this — the wedding process is not something that most people end up going through enough to be experts at it (let’s hope not, at least). It is a crazy time trying to plan it, and even if you have a wedding planner, you still had to pick that person.
Visit Seth’s site and see what he has to say about how to deal with these "naive" consumers. I think his insight was right on track.
I would love to hear how anyone else is dealing with this issue in their own businesses. I submit that this blog is one of the ways that I am addressing it in my business.
I have recently come across an excellent blog written by Peter Siegel, a consultant
in California that deals with a range of small businesses being bought
or sold. When I come across something especially helpful for buyers or
sellers, I will be sure to highlight it here (even if it may be an old
blog on his site).
Of course, I won’t post his entire blog entry here. That would kind of
be cheating on my part, wouldn’t it? I will be sure to give you the
link to the specific blog entry so you can read it in full.
This particular entry has to do with a client of his that moved forward on the due diligence on a deal that was eventually shot down due to the landlord not being willing to renegotiate the lease terms.
I have seen it plenty in the time I have been doing this, as well. Landlords are oftentimes the bottleneck when it comes to the due diligence period. Even if they are willing to work with you (the buyer, seller, or business broker), that doesn’t mean that they will move quickly.
Basically, there is no reason for them to — they already have the space leased. What is the incentive for a landlord to go out of their way to help an owner that is trying to sell their business?
There are some landlords that will move quickly, and some that are more inclined to work with their tenants than others (and conversely, there are some that feel they have no reason to cooperate at all).
When you are buying a business, you need to establish a rapport with the landlord as quickly as possible. If the landlord will not assign the lease, then there is no reason to pursue the deal. The other pieces are equally important, but I would suggest that you start the process with the landlord as soon as you have a signed contract.
***Please, if you are signing a commercial lease, make sure that the lease is assignable. If the landlord wants the authority to approve the assignee (which I would advise landlords to insist), then use the magic words "which consent shall not be unreasonably withheld".
My client is now out over $6,000 in CPA fees for due-diligence and attorney fees for contract reviews, over 120 hours over a three month period, when he should have pressed harder in the begining (one key item on my checklist for financing clients) to check with the landlord about future lease terms!