The Final Four When Buying or Selling a Restaurant

restaurant for sale The "Final Four" was recently held in Atlanta, which had the restaurant brokers thinking about the final four when it comes to selling a restaurant or buying a restaurant. What are the final four things you should do before picking up that check at the closing table if you’re selling the restaurant? How about buying a restaurant – are you covered on these last items?

Like the basketball tournament, getting to the final four is a journey where countless small victories are won along the way. Buyers and sellers, by the final week are done with due diligence, finished with inspections and should be coasting to the closing. But, there are always a few last minute things you need to remember. Make sure you’ve covered these points so you are ready in the final days and closing takes place without a hitch.

So what’s the most often forgotten final four if you’re selling a restaurant?

1) Passwords, Codes and Keys: If you’re selling your restaurant, put together an excel spreadsheet that lists out any codes and passwords the buyer might need and bring it to the closing table. It should include alarm codes, safe combinations, passwords to your website as well as log-ins for social media sites. The buyer will need these to access the business and he will want to “tweet” and “Facebook” the world to let them know he’s taking over. Don’t forget the keys. The restaurant brokers have attended plenty of closings where the seller didn’t bring the keys to the table.

2) Remove Personal Belongings – both physical ones and items from your computer. If you store your match.com “matches” or personal tax returns on your store computer, move these personal files and any physical files offsite before turning it over to the buyer.

3) Take Your Change or Sell it to the Buyer: It’s not unusual for sellers to keep several hundred dollars on hand in change for multiple drawers and the safe. That does not (usually) convey to the buyer. Do a count of the change when you do the inventory and make sure you are reimbursed for this by the buyer separately or he will need to bring his own.

4) Change over Utilities: Call the electric, gas and other utility providers and put in disconnect orders for the day AFTER closing. The buyer will need to call behind you and schedule their connection for the day OF closing. This keeps those not too bright folks at the gas company from accidently disconnecting gas in the middle of lunch service the day of closing.

How about if you’re buying a restaurant? Here’s the Final Four from the restaurant brokers:

1) POS System Changeover: No matter how many times we warn them, buyers tend to put this off or forget to change over the POS system. Why is that important? Well, virtually every POS system handles credit card payments so that means you’re not going to get your charge card receipts (70-80% of your sales) deposited to your bank account. DON’T put this off or forget it. Worst case scenario, if you do forget, here are a couple of stop gap measures. First, see if the POS provider can just redirect deposits to a new account name and number. If they can’t, you may be out of luck. Have the attorney write up a statement that covers you at closing stating that the seller owes you the credit card receipts minus the credit card transaction fees until you get this handled.

2) Get some Change: You need change to operate (one’s, fives, tens and plenty of quarters, dimes, nickels, pennies). Go to the bank and get enough change (at least $100 per drawer plus extra for the safe). If you don’t want to go to the trouble of doing this (I wouldn’t), then simply count what the seller has on hand and reimburse him for it. It is NOT included in the sale in almost all instances. His cash belongs to him.

3) Insurance: The landlord will have a requirement for insurance. The franchise will have a requirement for insurance. You NEED insurance in case the place catches on fire between the time you leave the closing table and when you get to the store. Make sure you have an insurance binder in place at the time of closing. Your restaurant broker should be able to recommend someone to help with this.

4) Hire a locksmith and CHANGE alarm codes and passwords: There’s an old adage in the industry that you “trust but verify.” This is not a matter of trusting the seller. He can be a perfectly honest and wonderful person BUT you have no idea how long it’s been since he changed the locks and the manager (from six years ago) or his ex-wife may still have access to the place. You just spent a lot of money. Don’t leave it unprotected. Change the locks. Change the alarm codes. Change the safe combination. Change the passwords on social media and the website. Make sure the new ones are available only to those you trust.

That’s it. Not nearly as much fun as the final four basketball games but filled with plenty of drama, requests for someone to referee what happened and times you can call “foul” if these final four aren’t handled when you’re buying or selling a restaurant.