What do you guys think of this?

Question

My family started a big corporation 3 years ago. Because of some set backs we started with $1500.00 start up capital instead of the $50,000.00 that was in the budget. Well it has been a long hard 3 years and my dad thinks we need to sell the business now while everything is good cause we run a risk of losing it in the near future. It cost about $500,000 for the building, land, and equipment but it is now worth $1.6 mill. He says he will sell it pay everything off and still have a couple hundred thousand left over. We plan on opening the same type business only on a smaller scale only this time we will have plenty of capitol and sence it will be on a smaller scale we can offer a lower price and more of it will be profit. Im only 22 and i know im a bti young but it still worrys me but this will help all the family get out of debt and start over only better this time. Does this all sound like a good idear or what? I would rather sell it for something than lose it and get nothing.

Answer 1

Sell if you have a chance of losing it "all". But would it be attractive to a buyer? That kind of money most people do research, wouldn't the buyers know there is a high risk of losing?

And why would your Dad want to start another company if he has such a high risk?

More info is need to really make a judgement call....

good luck

Answer 2

yes

Answer 3

The first question I would have is - if there is a chance that you would lose the business in a few years, what changes by opening the same type of business.

Second, although the idea as presented sounds good, be advised that the buyer may require a no-compete clause (I know I certainly wouldn't buy someone's business if all he was going to do was re-open down the street and compete with me).

Finally, you really don't present enough information for anyone here to make an informed decision on whether this is a good idea or not.  Only a good accountant can really answer the question (and a little bit of luck, since no one can truly predict the future with 100 percent accuracy).