The following are actual stories of actual events that occurred
Deli Sale ( A lesson for Sellers)
A very successful corporate man wanted to buy a deli in a high end neighborhood for his wife. I found them a deli which was actually several blocks from their house and they loved it. The deli was attractive and built correctly however it was being run by the young son of a man who had a very successful deli several miles away. the son was not motivated and did not want to run the deli. As a result of the sins lack of interest the deli making a little money for the sons salary but nothing for the owner.
The couple liked the deli and made a deposit and in the offer agreement it stated that the deli had to have $6,000 of sales over a week during a test period. The store was full of inventory at the time at the time of the offer agreement and is was doing around $6,500 per week. The offer was for $60,000.
I told the owner to keep the inventory full and keep the business running correctly and to keep the business clean and correct.
The buyer according to the offer agreement has 60 to close. Due to the landlord’s extremely lengthy vetting process and the buyer being busy at work the buyer was ready for due diligence at almost 60 days after the close.
The seller’s son in preparation of the sale had already taken another job and was only working part time. They had sold off most of the inventory against my advise and reduced the hours the deli was open. The seller do to the buyer not wanting to perform the due diligence early in the 60 day period had lost faith in the buyer and was thinking he was going to be forced to sell off the assets and close the deli.
Finally a few days before the 60 offer the buyer and his wife spent a day at the deli as part of the examination of the sales for the due diligence. The sales for the day was less than 1/2 the $1000 per day that they expected, and worse than that the deli had become infested with cock roaches and rodents.
The deal broke because the seller had let the business fail and because the buyers wife, who was buying the business as a lifestyle business, not because she needed the money was disgusted by the roaches and mice.
The seller offered to fill the place with inventory and reschedule the sales test period The buyer declined.
I had to quickly find another buyer at a greatly reduced price as an asset sale with no testing of the sales. I got a new buyer at the reduced price of $40,000.
Two weeks later we had the closing and the sale was made.