Business opportunity question

[stoops the eternal pimp]

I've been approached about buying out a private drug screening company that has several accounts locally with places like Haliburton, Cudd, Simonton Windows, and several drilling companies to go along with the smaller businesses. Honestly, its not a big cost but right now, any cost is risky with our current income situation. It seems like it would be a good money maker but I don't know anybody in the business to talk with about all the pros and cons..

Please if you have any knowledge that would be useful, I would greatly appreciate you sharing what you know..

[SoonerInKCMO]

Will you have to watch guys pee in a cup?

That'd be a deal breaker for me.

[sooner_born_1960]

You gotta ask, If it's making money, why they selling?

[stoops the eternal pimp]

This guy just got a divorce and he's going back to work for a pipeline company...he has no family here and doesn't want to try and keep it going while he is doing the pipeline thing

[swardboy]

You're buying a cash flow...or not. A recast sheet is your best friend at this point to determine Seller's Discretionary Earnings. If the seller is ok with showing the last three year's financials and a ytd P&L statement, I believe most accountants could recast it to find if there's enough money to make a living, pay back any loans necessary to buy the business in a reasonable time, and to get a return on the investment.

[swardboy]

Better yet, my company will pay you up to $5,000 for a seller referral if this guy wants to sell his business, and I can get my listing broker's permission to handle it. Our niche is selling businesses confidentially.

[BillyBall]

What is the multiple of TTM EBITDA that he is asking for it? Does it make money at the net income level?