Hey,
I'm interested in getting started with buying a business.
Let's say that there's a big pizza franchise around my area that wishes to sell, and I want to purchase it.
I was wondering if it's possible for a regular person with no real credit history to do a leveraged buyout on the pizza shop. Example, going to the bank and convincing them to use the company's assets to purchase it.
Also I'm wondering if there's any bankruptcy risk involved, or how somebody can protect themselves from it if there are any risks.
2007-12-20 07:48:26 · 6 answers · asked by Tommy C 1 in Business & Finance ➔ Other - Business & Finance
From a legal standpoint there's nothing to stop you, if you can get suitable financial backing. Banks are not the only possible source.
I would suggest that a fast food outlet is not the best choice. Have a look in the surrounding area. There are probably dozens of other fast-food outlets. It's a saturated industry so you could only succeed by taking customers from your competitor's. You will have to offer something significantly extra that your competitors can't.
Have at look at other areas before you commit to anything
Ian M
2007-12-20 07:57:07 · answer #1 · answered by Ian M 6 · 0⤊ 0⤋
The people advancing the money would have to believe that the person is above average. In an LBO, the people advancing the money are the owners of the pizza franchise that is being bought out. The buyer is usually an employee. The former owners sell the business to the buyer and take a mortgage on the business. The new owner pays off the loan with profits from the business. If the pizza franchise has assets, like a big bank account, then the buyout price would be the value of the business plus the amount in the bank. So a person could not do an LBO and have enough in the bank to pay for it. As far as bankruptcy is concerned, the former owners would be stung. That's why they would have to think that you were more than average.
2007-12-20 15:57:38 · answer #2 · answered by steve_geo1 7 · 0⤊ 0⤋
A leveraged buyout is started by acquiring sufficient stock in the particular company. You would not be in that situation with a particular franchise shop.
Why would a bank want to back you? Do you have experience running a pizza business? Do you have experience in finance? You say you have no real credit history, so the answer is, No, no one is going to back you for this.
There are better ways to buy a business or start one. Trying a high-powered move normally done by a corporation with attorneys is not the way to start.
2007-12-20 15:58:05 · answer #3 · answered by heyteach 6 · 0⤊ 0⤋
To establish good credit you have to go to a bank and borrow $100.00 on terms. Set aside the money so you won't spend it and pay it back according to the terms of the loan. Eventually, borrow increasingly larger amounts of money until you have created a relationship with the bank and one or more of the loan officers. Then, find your self a rental property for sale that you think you can buy low, make some minor cosmetic repairs then either sell for a higher price or keep as a rental property.
Read the series of books that begin with "Rich Dad, Poor Dad". Read the book "How I made a Million Dollars in Real Estate".
In three to five years you will be a millionaire. In less than ten years, you will be a multi-millionaire.
2007-12-20 15:59:21 · answer #4 · answered by CrG 6 · 0⤊ 0⤋
Yes, you can borrow to buy the business. Certainly the business will be part of the collateral, but the bank or lender may want you to put up other assets as collateral, too. There is risk of failure and bankruptcy with any business, and especially restaurants.
2007-12-20 15:59:43 · answer #5 · answered by hottotrot1_usa 7 · 0⤊ 0⤋
Im pretty sure that somewhere down the line someone will try to screw you over. Murphy's Law. People hate on others success. But im sure you would succeed
2007-12-20 15:52:15 · answer #6 · answered by mac_byaah 3 · 0⤊ 0⤋