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Dimitry K., Esq.
Dimitry K., Esq., Attorney
Category: Business Law
Satisfied Customers: 1611
Experience:  Run my own successful business/contract law practice.
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My Sister and I own a restaurant and everthing is under my

Customer Question

My Sister and I own a restaurant and everthing is under my name (corp. and liquor lic)
one of my silent parntner who owns 40% is not sharing the losses. how can I buy him out?
his investment was $80,000. the restaurant is about to close, and is bleeding .I have allready put in to the bussiness losses $50,000 and there is an outstanding balance of depth of$ 65,000
and we can't put in any more $. and he has no money and I think he is broke.
I have a potential investor who is willing to buy 40% for $80,000.
what would be a reasonable offer to get him out and let the new investor in.
please advise
Submitted: 6 years ago.
Category: Business Law
Expert:  Law Pro replied 6 years ago.

It would seem that your in the driver's seat - business about to potentially close and he nor you have any monies to put into the business.

 

What business form is the business - partnership, LLC, Corp - what?

Customer: replied 6 years ago.
it is a corp.
Expert:  Law Pro replied 6 years ago.

Did all the owners make an equivalent investment - although not equal but as to percentage of ownership.

 

How much monies did you and your sister put into the business?

 

Are there any other investor/owners besides you, your sister, and this silent investor?

Customer: replied 6 years ago.
my sister 20% = $40,000
Ihave 40% and I put = amount to purchase the business$ 80,000 + $45,000 to complete the renovation +$ 12000 to cover rent.

and there is no other partner.
Expert:  Law Pro replied 6 years ago.

So - you have 40% - put in the $80k initially + $45k + $12k

 

sister has 20% - put in $40k initially

 

3rd owner has 40% - put in $80k initially

 

The standard way to price these is to start with 40% of teh annual gross. Pricing will go up or down with the type of licensing the business has for liquor and permitting live entertainment on the premises. In a good restaurant the food cost should not be over 38% and labor should be about the same. The basic reason for capitalizing the income for pricing is that for some rason restaurant and cocktail lounges (bars) operators have a greater tendency to skim their profits than most other businesses.

 

There are other ways to evaluate - that's to work with the fair market value of teh assets, cost of inventory, and at least one year's net for goodwill.

 

How long have you been in business?

Customer: replied 6 years ago.
8 months
Expert:  Law Pro replied 6 years ago.
OK, what are the assets and inventory worth?

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