Restaurant Realty recently sold The Royal Lounge located in West Covina in Los Angeles County.
Veteran Agent Abe Skaletzky first met the owner of the Royal Lounge about a year and a half ago. After reviewing the financial statements and the existing lease, Abe quickly realized that the business was salable. It had a major marketing problem, because it only had one year remaining on the lease. Abe advised the owner that he should immediately request a new long term lease (ten years plus one ten year option) before we put it on the market.
Abe shared, “My restaurant brokerage experience has taught me that it is always preferable and easier for the current business owners to acquire a new lease at favorable terms than a new untested requesting a new lease.
I volunteered my services to help my client, the seller The Royal Lounge, negotiate a new lease that will be transferable to a new buyer. After lengthy negotiations with the Landlord we were successful and received a 20 year lease.
After listing the property, we had several buyers for the business and we finally focused on one buyer that stepped up and agreed to pay $650,000.00 for the business. Our buyer was financially solid to satisfy the landlord to assume the lease and qualified for an SBA loan to cash out the seller.
The seller was quite nervous and wanted to keep the sale quiet and confidential until the prospective buyer qualified for the lease and approved for an SBA loan before he would agree to post the mandatory California Alcoholic Beverage Control (ABC) posting of Liquor License transfer document on the front door.”
The seller did not want to prematurely alert his customers and employees during this process because if the sale would not go through for some reason then that would have a negative overall effect on his business and consequently reflect poorly on the broker.
I was determined to sell the business and consummate this transaction and did not want a very unhappy client. After the contract was signed, I assured our client, the seller, that I would personal guide the buyer to keep the sale confidential during the entire escrow process, which included ABC liquor license application, landlord’s approval of the assumption of the lease, and the small business (SBA) loan application.”