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Restaurant Acquisition Due Diligence: Case Study

How one international restaurant buyer was able to pay a fair price for two casual restaurant locations in downtown Miami.

The issue:  This international restaurant client needed to purchase a two restaurant location located downtown Miami at a fair price.

Our approach:  Beckles & Co were hired by the client to conduct buyer-side acquisition due diligence on their behalf.  We reviewed the target restaurants’ financial condition and operations.   The restaurant operations included the main location down town as well as a second location that was operating under a concession agreement with a major law firm. During our examination of the financial statements, tax returns and contracts, we identified areas in which the client’s financial condition was not as strong as reported.  Also we found a lack of transferability of the concession agreement to our client.  This was huge because there was no guarantee our client would be able to continue to operate that location.  We helped our client understand how these issue could affect the current valuation and ultimately affect the sales price to their advantage.

The outcome:  Beckles &Co. helped the client secure the winning bid for the target by not overpaying.  After we prepared a revised valuation for the restaurant group our client was able to negotiate a lower price for the restaurant group.   The client was able to achieve a 10% reduction in the price as a result of our recommendation.