FBO Purchase worth it ?

On Sun, 3 Apr 2005 15:51:18 -0700, C J Campbell wrote:

What are the assets of the FBO? Does it have the fuel concession? What are
the terms of the lease? What is the projected revenue -- realistically? What
are the real costs? Are there any environmental concerns (underground fuel
tanks, etc.)? What is the internal rate of return? Does your friend have a
business plan? Are there any hazardous materials, such as asbestos and lead,
in the building materials? Is the building up to code? Is there room for
expansion? What is the competition like?

all good points.

and: does he have the money and the dedication for running an FBO? will his
family join in?

#m

--
http://www.hotze.priv.at/album/aviation/caution.jpg

Martin Hotze wrote:

all good points.

and: does he have the money and the dedication for running an FBO? will his
family join in?

#m

Dedication....yes. Money.....hmmmmm. ;-)

Toño

C J Campbell wrote:

What are the assets of the FBO? Does it have the fuel concession? What are
the terms of the lease? What is the projected revenue -- realistically? What
are the real costs? Are there any environmental concerns (underground fuel
tanks, etc.)? What is the internal rate of return? Does your friend have a
business plan? Are there any hazardous materials, such as asbestos and lead,
in the building materials? Is the building up to code? Is there room for
expansion? What is the competition like?

A lot of guys are trying to sell an FBO, but in fact they don't own
anything -- everything is leased. If all they have to sell is an empty box,
why buy it?


Great points and questions, CJ. I will pass all of this onto my friend.
I especially like the last question!!

Thanks!

Toño

Your friend needs to do what a bank would do before giving an FBO a loan.
The bank is going to look at the value of the accounts receivable,
equipment, inventory and general intangibles (which is mostly the "blue sky"
or going concern value of the business). The blue sky value of the business
has lots to do with the business reputation. I would inquire with other
business owners and A/C operators on the field to get an idea of the
company's reputation. When you buy a business, a car or an airplane,
evaulating the seller is very important, including the seller's honesty,
charactor and organization. Your friend will also want to size up the
employees to get an idea of whether they are honest, happy, capable and so
on. If the employees appear unhappy, your friend should think again. Your
friend also needs to check with the vendors to make sure the business has
been paying its bills and that it has a good reputation.

Definately get a lawyer and an accountant involved. Start a check list of
items which need to be considered and documents to be prepared. Do not make
the deal and then have the lawyer paper it up. First talk to the lawyer and
the accountant about how to structure the deal for the best tax
consequenses, then make the deal. Generally what is good for the seller
taxwise, is bad for the buyer.

Kevin Dunlevy

"Toño" wrote in message
...
Hi all,

I have a friend that is about to purchase a small FBO. Now we all know
that owning a small FBO is a labor of love at the very least. However,
he is wondering if it is really financial suicide given the trends of
today's laws, governmental regs, legislation, TSA, etc.

His (my) question is: Do any of you have any general or specific
thoughts that you might offer him before he signs on the dotted line?

Thanks,

Toño

Kevin Dunlevy wrote:
Your friend needs to do what a bank would do before giving an FBO a loan.
The bank is going to look at the value of the accounts receivable,
equipment, inventory and general intangibles (which is mostly the "blue sky"
or going concern value of the business). The blue sky value of the business
has lots to do with the business reputation. I would inquire with other
business owners and A/C operators on the field to get an idea of the
company's reputation. When you buy a business, a car or an airplane,
evaulating the seller is very important, including the seller's honesty,
charactor and organization. Your friend will also want to size up the
employees to get an idea of whether they are honest, happy, capable and so
on. If the employees appear unhappy, your friend should think again. Your
friend also needs to check with the vendors to make sure the business has
been paying its bills and that it has a good reputation.

Definately get a lawyer and an accountant involved. Start a check list of
items which need to be considered and documents to be prepared. Do not make
the deal and then have the lawyer paper it up. First talk to the lawyer and
the accountant about how to structure the deal for the best tax
consequenses, then make the deal. Generally what is good for the seller
taxwise, is bad for the buyer.

Kevin Dunlevy

Kevin,

The people that currently own this business are scrupulously honest and
well known in the community. The business has good employees, poor
equipment, good vendors, an generally run-down building that has a lease
that will expire in a few years. The last time the port renewed the
lease (about 5 years ago) they doubled it. The port has earned the
reputation of being somewhat "aviation unfriendly".

Though my original post was admittedly general, I think that I have
collected some valuable advice from you and the others here.

Thanks to everyone who took the time to respond. I will let you know
the outcome and maybe some of you can drop by for a real old school FBO
experience one day. ( You know...the kind of place with the bad coffee,
poor furniture, lots of half-finished restorations, and old timers
talkin'bout the good ole'days of flying.

Take care,

Toño