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Any business brokers can help me with a question?

Posted on 11/20/12 at 1:10 am
Posted by Lookin4Par
Mandeville, LA
Member since Jun 2012
1232 posts
Posted on 11/20/12 at 1:10 am
Trying to decipher a business listing on A brokerage website. Their business for sale listings have the asking price, revenue and cash flow on the listing. I am wondering what the cash flow means on these advertisements.

example:

convenience store
asking price: 975,000
Revenue: 1,300,000
cash flow: 360,000

This cash flow must mean the net profit right?




Posted by nolanola
Member since Nov 2010
7580 posts
Posted on 11/20/12 at 1:16 am to
Yes, typically cash flow would equal the owners take home before taxes. It may includes perks. For example the company made $330,000 and they added back $30,000 in things like travel, auto expenses, etc.
Posted by oldschoolgreats
Member since Nov 2012
1902 posts
Posted on 11/20/12 at 9:27 am to
don't know anything about this type of business but almost a 38% return on investment. thats very, very, good. net cash flow is after financing cost (but before depreciation) so thats a positive. would you have to work at the store or are there expenses for management and operations. if you don't have to work every day then sounds like a solid idea to review further.
Posted by RetiredG8tr
Pensacola Fl 32503
Member since Nov 2012
44 posts
Posted on 11/20/12 at 7:37 pm to
4Par,

You didn't post enough info. Is revenue net or gross. What is the percentage of gas revenue to inside sales revenue? A difference between a 35% gross margin and a very small gross margin.

I was in the business for many years from the position of a cooler boy to an executive with the largest chain. I would be happy to advise you concerning your due diligence. I did supervise stores in BR ( Plank Road & north) and Alexandria. I did the whole bang, locations, construction, staffing, and profitability. In the old days it was Pak-a-Sak, then sold to 7eleven.

If you want help, I'd be happy to talk to you.
Posted by Lookin4Par
Mandeville, LA
Member since Jun 2012
1232 posts
Posted on 11/21/12 at 12:02 am to
Retired, The information that I posted was exactly what the business brokerage gave. I will have to sign a confidentiality agreement and disclose my financials in order to look at theirs. I will update if we go any further! Thank you.
Posted by Athanatos
Baton Rouge
Member since Sep 2010
8140 posts
Posted on 11/21/12 at 12:45 am to
Good deal of fail in this thread. I'll post if I get some time.
Posted by RetiredG8tr
Pensacola Fl 32503
Member since Nov 2012
44 posts
Posted on 11/22/12 at 5:14 pm to
4par, The general rule was (70s-80s) one could expect inside sales for one month to equal yearly income for the owner. There are many factors though. When it comes to convenience stores I probably would only buy one from a private owner. Large chains sell losing/troubled locations for a discount just to get rid of them. Sometimes it can work to your advantage. Individual owners can do things chains can't..if you take my meaning.

Good Luck......
Posted by jso0003
Member since Jun 2009
5170 posts
Posted on 11/22/12 at 9:11 pm to
This doesn't pass the "too good to be true test"
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