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 are very few restaurants that have the distinction of having been successfully run for
16+ years 20 years [editor’s note: confirmed after posting that the start year was 1993!], and even more rare is the restaurant that has done so with only one set of owners. Avalon Restaurant & Bar at 2619 West Main Street, in the Fan District, has done so under the care of owner Peter Harahan since he first renovated and opened it so many years ago.
Even as a well-established restaurant, Avalon has recently gained recognition by bringing in Chef Jen Mindell to add her well-known flair to the kitchen. Chef Mindell was recently recognized by the Richmond restaurant community as a 2013 Elby Nominee for “Rising Culinary Star”.
Congratulations to the new owners, Walied Sanie and James Baldwin (pictured), who took the reins from Peter Harahan effective late yesterday afternoon. The new owners are keeping the staff in place and will do some remodeling after getting settled into ownership. I look forward to seeing how their vision of the restaurant develops and the changes you will make happen over the years to come.
This particular restaurant holds a special place in my heart because not only have I been close friends with a number of the staff here over the years, but also it is the place where I met my wife several years ago. It means a lot to me to have been involved in this deal, and I appreciate that it will remain to be Avalon under the new ownership.
**Richard Holden and Nathan Hughes, both with Bandazian & Holden, Inc., brokered the sale of the business and coordinated the new lease with the owner of the building.
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.
I see far too many businesses close rather than accept a price lower than the owner believes it is worth (more than ZERO is way too many).
Pride is usually the culprit in these situations. Often the argument is, “we put $x into the build-out and equipment and we need to make that back”. On the surface this sounds like it makes sense, but those are sunk costs — in other words, money that was spent in the past. That works great as a psychological barrier to selling, but it is healthier to keep the costs in mind without getting too hung up on those numbers. There are many reasons why the dollar amount you put into the operation of the business would carry less value (or no value at all, or even a negative value) to a prospective buyer — wear and tear, style, operational differences, etc.
Sometimes a little perspective is needed, and there is a recent post from Penelope Trunk that provides an argument that I hadn’t thought of before — being able to say you sold your business is a great resume builder! She goes even further to say that it doesn’t really matter how much you received as a price for the business because the terms of a transaction are expected to be confidential, or at least that it is not considered strange to not disclose the terms of the sale.
This quote from her post says it best:
To be honest, you still look pretty good, compared to the rest of the world, if you say you started a company and it failed. Because the gumption and intelligence to start a company is flattering to anyone.
But you will look really good if you say you sold the company. Even if you get someone you know to buy it for a very small amount of money.
Of course it is better to sell for more, for a lot of reasons. But there is a point where you are ready to get out of your business. Maybe you’ve gotten what you consider to be a “low ball” offer (someone giving an offer much lower than they think you will accept, just on the off chance that you will go for it). Well, maybe it’s time to consider that offer more seriously. What’s more important — “winning” the negotiation OR getting out of the business without having to say that you shut it down?
All I ask is that you consider this advice when you’re making that fateful decision whether to shut the doors or to take that offer that you feel insulted all of your hard work.
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.
No one likes to do paperwork. (well, almost no one — if you find that rare individual, hire them and keep them!)
In order to keep your corporation or LLC compliant, there are things that must be done consistently. These requirements are not onerous, but they are easy to overlook in the hustle of your day-to-day business.
I have seen a number of closing on business deals that are delayed because the corporate books weren’t kept up, or the annual fees weren’t paid and the corporation has to be re-instated. Be sure to set an appointment in your calendar once every 6 months to review all of these items and be sure that there is nothing that you need to catch up on.
1. File your initial/annual reports (also known as a “Statement of Information”)
2. Keep up to date with your corporate minutes and resolutions
3. Record any changes for your corporation/LLC by Filing “Articles of Amendment”
4. Make sure you’re legal when conducting business out of state
5. Don’t commingle your personal and business finances
6. File DBAs for any name variations
7. Don’t forget to close an inactive business by dissolving your corporation/LLC
Read the full post for the details behind each of these pointers and consult with your accountant or your attorney, or whoever helps you with your corporate records.
If you are thinking of selling your business, this review should be on your checklist to take care of at the beginning of the selling process.
Take the little bit of time now to stay in compliance and avoid any red tape nightmares later when you find out that you didn’t!
Is now a good time to sell my small business?
What about all of the talk about changing the capital gains tax?
Should I sell now, or wait a couple of years?
What about the upcoming flood of retirees? Won’t all of that money coming into the market help increase prices?
Lucky for us, there is a recent article about exactly these questions in the New York Times from last Tuesday. Check out the article and the great comments by clicking here.
**I will delve into this topic more over the next year (and probably much longer than that, since this *is* what I do)
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.