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Thread: Opportunity to purchase party bus business

  1. #1
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    Question Opportunity to purchase party bus business

    Hi. My name is Eric and this is my first post.

    I have the opportunity to purchase a profitable party bus business and need to make a decision in the next couple of weeks, as the selling party and I agree that it makes the most sense for the sale to complete on January 1.

    The existing business has 4 E450 (2005 & 2007) Fords that they mostly use Fri-Sun for weddings, concerts, bachelor parties. I am having my accountant review the books, which show a profit of $75k on annual sales of $195K. The 4 buses are paid for and would be included in the sale, along with the web page and software they are using. All insurance is up to date. They have been in business for 4 years, have an A- BBB rating and are given high marks on Yelp, Facebook and Google. The business uses contract drivers.

    The current minority owner (15%) would be coming over a part of the deal, so I will be making the agreement to buy the company from the majority stack holder (85%). In the new company I would maintain this 85% and the minority owner would maintain their 15% share.

    I am an IT person by training and have never run a small business at all, other than doing some side work in IT consulting. So, given the facts stated above (if there is even enough to go on), how much is this business worth? Also, what else do I need to obtain from the seller during this due diligence phase?

    Thanks and look forward to the responses.

    Eric

  2. #2
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    Quote Originally Posted by ehauptma View Post
    Hi. My name is Eric and this is my first post.

    I have the opportunity to purchase a profitable party bus business and need to make a decision in the next couple of weeks, as the selling party and I agree that it makes the most sense for the sale to complete on January 1.

    The existing business has 4 E450 (2005 & 2007) Fords that they mostly use Fri-Sun for weddings, concerts, bachelor parties. I am having my accountant review the books, which show a profit of $75k on annual sales of $195K. The 4 buses are paid for and would be included in the sale, along with the web page and software they are using. All insurance is up to date. They have been in business for 4 years, have an A- BBB rating and are given high marks on Yelp, Facebook and Google. The business uses contract drivers.

    The current minority owner (15%) would be coming over a part of the deal, so I will be making the agreement to buy the company from the majority stack holder (85%). In the new company I would maintain this 85% and the minority owner would maintain their 15% share.

    I am an IT person by training and have never run a small business at all, other than doing some side work in IT consulting. So, given the facts stated above (if there is even enough to go on), how much is this business worth? Also, what else do I need to obtain from the seller during this due diligence phase?

    Thanks and look forward to the responses.

    Eric
    That is a very high profit margin given the sales, but your post lacks lots of important details. Feel free to shoot me an email at brandon at livery removethis leads.com

  3. #3
    Senior Member Cedar Mill Limousine's Avatar
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    I agree with Brandon: the profit margin seems quite high. Even with them doing all paperwork (no paid secretary) and quite frankly no other paid positions other than drivers, that still seems very high. If those numbers are right, you must be in a very hot market.
    Rich Rottier
    219.808.0976 | richrottier@gmail.com

  4. #4
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    It seems high to me also. My next steps are to have my accountant go over the Quckbooks for this year and also review the bank account statements. What else should I be asking?

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  7. #7
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    Quote Originally Posted by NVTours View Post
    Extremely high!!!
    Yes the margin way high. I would be a little skeptical.

  8. #8
    Senior Member Cedar Mill Limousine's Avatar
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    Ask how many clients are on discounted fares and how much. Also, what charities do they give to and how much.
    Rich Rottier
    219.808.0976 | richrottier@gmail.com

  9. #9
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    What is competition like? you do know what the typical run involves (day of week/ # of hours/# of passengers? Using those numbers, Call the competition as a potential client with a hypothetical run to determine competitive situation. Tell them you got a price from your would-be company lower than the price they give you. Ask why you should go with them vs your purchase (this would give you an idea of how others in the business view your new company).

    Number of runs/vehicle per week/vehicle mileage/diesel vs gas/maintenance records. Are local regs in place to force retirement of the equipment. Need I point out these are 9 & 11 year old vehicles? Is the company & vehicles USDOT compliant?

    Web page be in your name?

    Need 3 years of Loss runs from the insurance company.

    CDL drivers? & can you depend on keeping them. contract drivers? You mean Sub-contractors? You are only as good as the drivers you employ, need to know about turn-over. Talk to the drivers & see how they feel about the company & its clientele.

    Without knowing some demographics/population numbers it is only possible to base purchase on the numbers they provide. NADA Guide or local bus company can ballpark the vehicles.
    Last edited by wimpy01; December 14th, 2015 at 02:43 PM.
    Bill Payne
    American Limousine, LLC
    Lake Wylie, SC
    704.576.5309
    Celebrating 9 years of superior service to the Charlotte, NC market. Serving corporate and individual clients with sedans, vans and limousines.

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