Raising Capital for Business Purchase w/ Great Real Estate

Raising Capital for Business Purchase w/ Great Real Estate

Member since 2018 · 2 posts · 1 vote

Hello, everyone! I have NEVER tried to raise capital because I have never needed to, but there is an opportunity that I feel compelled to jump on and I NEED to learn how to raise the capital and connect with people who would like to back me. There is a well-established business in my area and the owner is retiring. His family isn't interested in the business, and if he can't find a buyer he will close the doors. The business cashflows $95k a year and is fully staffed with trained, certified, and loyal employees who want to keep their jobs. The business sits on property worth over $400k. Asking price is only $475k. I have no need for any kind of big paycheck, so I am happy to pay off the full amount with the cashflow, but the owner is not interested in financing it. He wants out completely. I want the real estate and I want the staff to keep their jobs. It is my understanding that I am the only interested party at tye moment. The business will pay for itself in just a few years, the community will keep a decades old family business, and the staff will keep their jobs if we can figure out how to make this deal. Can anyone point me in the right direction, please?

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  • Scott WolfPro Member
    Lender · Boca Raton, FL · Member since 2014 · 1k+ posts · 959 votes
    5y

    @Shannon Gauthier, buy the real estate with a loan.  Make the purchase price $475k, and you'll need to come up with max 30% or $142,500(plus closing costs).  You can also try for an SBA loan to help get that number even lower.  Have you never needed capital because you are so flush with equity and cash it was never needed?  If so, tap your available equity.  

    Good luck!

  • Member since 2018 · 2 posts · 1 vote
    5y

    @Scott Wolf - If that was a possibility, I wouldn't be asking about raising capital. We just pulled equity for a rental purchase, so we don't have the liquidity.

  • Scott WolfPro Member
    Lender · Boca Raton, FL · Member since 2014 · 1k+ posts · 959 votes
    5y

    @Shannon Gauthier, there are plenty of posts on here about raising capital.  BP also sells a book about raising private capital.  Reach out to your network, or start networking.   

    It might also help if you post with the location of the property to gain attention of local investors and players. Perhaps a private lender or HML will come in for the down payment if the deal makes sense.

  • Investor · Ontario · Member since 2015 · 486 posts · 250 votes
    5y

    Hey @Shannon Gauthier there are ways to make this deal happen. It sounds like you need roughly (not inculding closing costs) $118,750 at 25% down to close on this deal. An SBA loan might fit. Heck you could likely do credit card stacking in your personal name and get 45k or so. Although this will come with a high rates it would likely make more sense in the long run vs giving up equity. You can service this debt with the cash flow from the business. Also seller financing is likley a good play here. 

  • Cliff BennerBusiness Member
    Accountant · Denver, CO · Member since 2020 · 394 posts · 183 votes
    1y

    @Shannon Gauthier Were you able to make the deal happen? What did you come up with?

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