The $16M Golf Cart Business That Refuses SBA Loans
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I think it's more like this is not going to qualify for an SBA loan. So we don't want a buyer that's even going to try. And that tells me a lot right there. This is a great business to own. Like demand's going nowhere. People are going to, you know, there's a lot of tailwinds for this stuff. I like it for the right person. Businesses that are interesting and may or may not be transferable and that there is just a complicated seller situation.

We don't have 100% here. Thumbs down on just the plus sign of Victoria.

Welcome back everybody to another episode of Acquisitions Anonymous. I'm Mills Snell, one of your co-hosts. Me, Michael Girdley, and Heather talk about a pretty cool business that we end up not liking all that much, but it's a really fascinating business in Virginia Beach. It is a golf cart and kind of slightly more sophisticated than golf cart, but not all the way like full cars.

uh, sales and rental business in Virginia beach. That's doing 16 million in revenue, uh, has some very complicated seller dynamics. Uh, this guy has multiple things going on. He's selling the business on his own. Um, it's a really interesting business though, because they're in kind of a captive market. They have some captive distributorship of premium brands. Uh,

They sell them, they sell used ones. We think they do service. They also rent to the tune of $30,000 a month in a very touristy location. So there's a lot to like about this one. We also talk about some of the complexity of buying a business like this, the situation around...

this business, this seller, they specifically call out that they don't want an SBA loan. So there's a lot that we cover in a short amount of time on this one, but there's a lot of these businesses out there. There's a lot of dealer type businesses that I think when you're looking for a business to buy, they hit your radar because they're a decent size. But when it actually comes down to the brass tacks of, is it viable? Is it transferable? It's kind of tricky. And we talk about that in this episode. Hope you enjoy. Stick around for a quick word from one of our sponsors.

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All right, guys. Are you guys ready to talk about some golf carts? Or no, let's do the chit-chat stuff first. How's everybody doing? Another day, another deal. I don't know if I've ever told you guys this, but my kids will pull up the podcast on YouTube, and my youngest son thinks it's live, and he'll tell my wife, call Dad. I want to talk to him while he's on the podcast. That's adorable. Well, let me tell you about this deal. I think it will be interesting.

Because they, Heather, they insult the SBA in this. That's why I chose this deal. Okay. Let's see. So it is a new and used car, used cars and golf cart product lines. I don't know what that means, but I think it's a car and golf cart. They should have reworded this. Yeah. Product lines. Is it a business? Is it a dealership or is it just the lines? You got me. Okay. So it is located in Virginia Beach, Virginia. Yeah.

Mills, you're from that end of the country. Is that a nice place? I have not spent any time in Virginia Beach. I'm sorry to disappoint you. It looks beautiful in these pictures. Yeah, it looks like a type of beach town you would find on the East Coast. So they have a bunch of photos here.

And it appears to be a new and used car dealership with over $16 million in retail and hotels, wholesale sales each year. They just opened a new location with a 20 year lease and as a prime location with ocean front in front of it. The business also includes a lucrative golf cart rental and sales business with over $30,000 a month in rental income during the prime rental season. The inventory is negotiable and they do not accept SBA loans.

It has been in business for 26 years. They have five employees and it is a franchise. And they actually have their website here, mochamericavirginiabeach.com, which I will open that up here shortly. Y'all, these mochs, I've ran one of these before. These things are awesome. They are so cool. It's not like a regular golf cart. It's not like a club car. Mills, calm down. Calm down. I'm getting excited.

Market is currently in high demand for all aspects of the business, and the locations are available for all aspects of company in the Outer Banks. The real estate is leased. It has a 6,200-square-foot building, and they pay $9,500 a month in rent. The lease goes through 12-27-2030. The owner is retiring and is willing to offer six months of support and training. The business is located at 1765 Virginia Beach Boulevard, Virginia Beach, Virginia. And here I can just scroll out. That is near Chesapeake and Norfolk.

Norfolk. Sorry about that. Be careful how you say that one. Yeah. Norfolk. Norfolk. So it looks like you're actually – okay. So this is actually an interesting geography. So Mills, it looks like I'm near the water. I'm on the beach, but I'm near the big towns of Chesapeake and Norfolk and Newport News, Virginia. Yep. All right. So what do these – Heather, what do these guys do? Well, let's hit it really quick because I don't think you said it. The asking price is $3.5 million. Oh, sorry. Okay.

Money. Who needs money? That's my motto for 2024. Well, we don't know how much they make. Asking price is $3.5 million. Inventory is $1.4 million. They have $200,000 in furnitures, fixtures, and equipment.

Yeah, so they're holding 1.4 million in inventory. So yeah, ask your 3F. It's kind of surprising that they have that little inventory doing 16 million in top line. I mean, I think about this as like a dealership model. It could be a flooring line of credit that they use so they don't really own the inventory. That's what I'm guessing when the number is so low. I mean, I guess it's used cars and it's this rental, and I feel like those are completely two different businesses. Yeah.

I understand like the real estate might be kind of synergistic, right? You need a lot and you need a location, but they're two very different businesses. One is sort of a tourist business. And the other one is, you know, the used car sales, which is a pretty tough business to be in, if you ask me. So, and I think, I think to clarify these businesses,

I don't think they're doing just regular used cars. Michael is flipping through the pictures. There's 30 photos on this listing. These Mokes and the Vanderhall, they're a hybrid between a car and a golf cart. They, I think, have seatbelts and they're street legal. And it's not like you're going here to buy a used Toyota Corolla or something like that.

But they're in that kind of like gray area where I think they do have to be registered. Like I think they have license plates. So they're a car. But like when you look at these pictures, they're like they look like little baby Jeeps, you know? Yeah. Yeah. And I think they get licensed under the same thing that golf carts get road licensed in some places. And they can't go on all roads, but like you're maxed out at 30 miles per hour or stuff like that. And you have a license plate when you drive them on the road.

So they're selling them and renting them. That's basically what it is, right? Okay. In a touristy area. And you're in a beach town. And it looks like they carry a handful of – they're a dealership for a handful of different brands. So they have the Moak ones that Mills likes. And then they have these other ones listed here. There's Candy, Icon, Epic, Orion, Vanderhall, and more. So –

One of these pictures had a display of some of those things. So where people have taken golf carts is pretty crazy from a design perspective. And these things are not cheap. I mean, you're talking about like a nice golf cart like this is, you know, $8,000 to $10,000 or more. And I think the Mokes are like over $20,000. Wow. It's crazy. So Heather, does this change your mind that this is a used car or a new vehicle and rental business? Like...

I mean, I like the rental business. Let's put it that way. I always liked the rental business. And it sounds like maybe they just sell off some of the rented, you know, once they reach a certain age or number of miles or whatever, then maybe they sell them off as used vehicles to the local community, I suppose. I would just want to know the mix. And of course, they're not even telling us any EBITDA here. And they're saying no SBA loans accepted. Now, let's just...

say something there. Everyone will accept the money from an SBA loan. It is money. So when they say it like that, I think it's more like this is not going to qualify for an SBA loan. So we don't want a buyer that's even going to try. And that tells me a lot right there because there's something wrong with the financials. They're not telling us the income and or the net income and they're not and they're not accepting SBA money. So do you think, Heather, this is not in a class code that is not accepted?

Right. Right. Exactly. Like it's not a lending business. Yeah. Yeah. Right. But the other thing I've seen sometimes is where a salesman,

seller will not want to deal with the just extra level of scrutiny and maybe headache on their part of procuring. I mean, lending process is a lending process, but the SBA is more stringent, which is why it helps to have people hold your hand who know the process. But I've also seen sellers say, look, I just want, I want the easiest transition. I want the easiest sale process, which is a red flag, like you're saying.

But that's fair if you've got a business that is making so much money that you know you're going to have a lot of buyers who have all kinds of options to finance it.

This is not, does not look to me like that kind of business. It looks like an SBA type of business as far as what the, what the, you know, the category that it fits into. And then you're saying, but I won't take that kind of, you know, buyer. So it, yeah, a little suspect to me that it means that, and of course I have a bias. I have a bias against anything used equipment or used vehicle sale. There's a lot of,

It gets a little shady. Cash is paid rather than them reporting it on their tax return. It could be something like that. That's kind of what comes to mind when I see this. All right. I have two thoughts for you guys. Number one is I bet they have a significant service business here as well and a parts business that they're not talking about because there is no way these mokey things don't get run in after somebody has a bunch of, you know,

Dos Aridas drives one of these into a tree and breaks it. And like that just happens. And plus, when you have a rental business, you have to do that. So I bet there's a significant amount of rental or repair income here. So that's kind of thought number one. And then I will pause there. And then my second comment is funnier. So if you guys want to talk about comment number one, go ahead. Otherwise, why would they not mention the maintenance business? Because that's what people would just salivate over. And that's what would make this interesting.

Right. Maybe it's so small. Could be. I mean, they have here, they're selling, I've pulled up their website. They're having accessories and all that kind of stuff. Are these electric? Yeah, I'm pretty sure. They are. So maybe that's it. I mean, don't admit I'm being stupid here. Cause I don't, I'm not an auto person, but yeah.

Is it true that electric vehicles require less maintenance than gas? It would have less maintenance, but, oh, Michael's pulling up prices. I'm fascinated. Well, they have their website. I'm not breaking the rules. This is their website. No, no, this is great.

Yes, they would have less maintenance, but also, Heather, like the battery, like they still have problems. You know, you still get flat tires. Sure. They still have to be towed back to the shop. The batteries, when the batteries die, they're very, very expensive to replace, that kind of thing. Holy crap. These guys, if you pull up how many different things they carry, they carry like 18 different brands of things. Pretty incredible. So like Club Car, you know, is a traditional golf cart. And those look like they were kind of $10,000 to $15,000.

And I mean, this is really nice. You know, it's street legal. It's got like special rims. I will tell you, I have not looked it up, but it says staff here. But I will pull up and tell you the profile of the person that owns this business. It's a guy named Jimmy who looks like Jimmy Buffett. And he and his wife is a realtor.

And she's the number one realtor in this little town. And they are basically the de facto mayor and mayoress of this town. And Jimmy loves everybody and he loves making deals. And he works in this shop and he's just happy as a clam when people come in.

And I think that's part of this. I think part of this trade-off that somebody's making to buy this business is like you typically end up as an owner operator and like you're in there living in a beach town and you join that community and you do that thing. So that's my thesis on this. Virginia Beach is huge. It's like 450,000 people. Virginia Beach is 450,000 people? Yeah. Yeah.

All right. I was close. Jimmy's name is Tim. You're right. That's awesome. I was close. His name is Tim. I don't hate this. A finance manager, a comptroller, a manager, and then maybe like another salesperson or something like that. This guy, Eddie, looks awesome. Maybe they offer financing? Yeah. Yeah. So they're getting paid for that too a little bit.

Yeah, so here you can get... I mean, y'all, when you go to the beach, like growing up in the southeast, when we go to the beach, like you have to have a golf cart. It's just part of the experience. See, that's not the way it is in the west. Yeah. You'd get killed.

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Man, I don't hate this. I mean, it all depends on price. But look, if you wanted to, we kind of go now to who should buy this business. If you want to live this lifestyle and you want to

be part of a beach community and live in a small town, you know, excerpt of this area of Virginia and just kind of live this life and be part of this small town community stuff. Like, this is a great business to own. Like, demand's going nowhere. People are going to, you know, there's a lot of tailwinds for this stuff. Like, you have exclusive rights to a lot of these brands. You're the only dealer probably for miles for all of them. It's hard not to...

I like it for the right person. But we don't know the cash flow and we can't really get financing. So what do you do to, you know, what's the valuation? That's going to be tough. And how are you going to pay for it? Let's make some inferences. If it's 16 million top line and even let's just say they're doing, you know, a million and a half or maybe it's a million dollars in EBITDA. They're only asking three and a half times.

So I don't think it's an outlandish valuation. I'll tell you why I think they don't accept SBA loans. Would you like to know why? Yes. It's because they are asking way too much money for it, and the SBA will not underwrite this deal. There's something wrong. You think this business is making –

And it's a great business. And he wants $10 million for it. And he wants $12 million for it. And the SBA is not going to, there's no bank SBA loan that's going to be able to touch what he's trying to do. It says the asking price is three and a half. Oh, he is? Yeah, he's asking three and a half. But my twist on it is he's not reporting the income.

And he didn't want to pay taxes ever. I've met this kind of person many, many times directly and indirectly. They love the cash nature of the business and the way that they're able to not pay taxes, but it's not legal.

And they don't a smart seller that really wants to get their value out of the business is going to clean that up for a couple of years and actually go through the pain of actually paying taxes and reporting everything on their tax return and then sell it. This is someone who refuses to do that. You know what further corroborates that point, Heather, that I just noticed? And Michael, I think you just highlighted this.

The owner is also, they listed the business themselves for sale by owner. Oh, it's sale by owner. Yeah. Oh, really? So that just further, that further infers your point, right? Of if I can save a dollar, if I can be, you know, very shrewd, I will. But it's probably to your point, been taken too far. I, Tim is a guy that loves to make a deal.

Heather, what percentage of his rentals do you think he takes $100 cash and puts it in his pocket and they throw away the receipt? Quite a bit. I think he probably gives a discount for cash or something like that. And I bet you he takes credit cards that he also doesn't report. I mean, some people just take it to the, you know, way beyond the limit and they're just not getting caught. They haven't been audited or whatever. And how are you as a buyer going to come in and report?

even know what you're getting in terms of cash flow. If a lender can't know, okay, we have a higher standard, but even you as a buyer, how are you going to know if they do kind of shady stuff so that they don't have to report it? So I think that's the problem with these kinds of businesses. Could you, I mean, could you create a clean break? You know, you don't do a stock purchase, you do an asset purchase, you underwrite the deal for those unexpected things, which I think

Again, if it's doing $16 million in revenue, I think they've got to have somewhere close to $1 million in free cash flow. And they're only asking three and a half times, could you structure the deal in such a way? And then create a clean break and go, hey, look, we're not doing that anymore. You could, but I think it involves a pretty big seller note so that you have something to claw back.

In case you don't know what you don't know when you close it, you know, you think it's a million dollars of cashflow, you close it and you find out it's actually 500,000 or whatever. You've got to have a seller note that you can offset. And, you know, maybe you clean things up. Maybe you convince the seller, I'll, I need your financing, a little bit of my equity to close it. I'm going to clean up the tax returns for a couple of years, and then I'm going to go refinance with an SBA loan and pay you off the rest of the seller note. So you get your cash out in a couple of years. Yeah.

Maybe something like that could work. I love what Michael just said. Well, OK. Like I know we're not trying to like – we don't dox people on this stuff. But the guy put his name on there. So I Googled him. I love that it says regular guy. He's fascinating. His LinkedIn profile has him hitting a golf ball.

And then his name on his LinkedIn profile is Tim Pash, and in parentheses, regular guy. And by the way, he's a third-order connection for me. I'm connected to somebody who's connected to Tim. I love LinkedIn. But I think what's interesting here is— Look at what else he owns. Yeah, he owns a bunch of other stuff. He owns this moat dealership that he's been in since 2018. He owns a crab pot company.

which maybe that's a food truck. He owns a wholesale business that he's been in since 2000. And then he owns an auto dealership. And then he says that he is, um, he has a decade in the sales industry and he currently works at great bridge auto sales as an auto finance advisor. It is my passion to help make other people make their car buying decisions, a smooth one. So I'm

He evidently like, yeah, it's crazy. Well, actually, he says he left Great Bridge Auto Sales in 2021. So I don't know how his... Maybe he just hasn't updated his... Tim, if you're going to get a job, you're going to have to keep your LinkedIn updated.

I think, though, this points to, you know, a phenomenon of businesses that are interesting and may or may not be transferable and that there is just a complicated seller situation around them.

I'm not I'm not even saying that, you know, this guy's doing anything, you know, illegal or anything like that. But just it's a complicated situation. The guy may or may not also be working other jobs at places that he doesn't own. He's got a bunch of different things he does own. This is just one that he's selling. It's just complicated, you know, and this isn't a person who necessarily has to sell. He says he wants to retire in the listing, but he could keep doing this probably for another retirement age.

And I hate to be the skeptic, and I'm sorry, this may not be his situation, but when I see a seller that has got a lot of other businesses going on, and they're selling something at not really the optimal time, you're kind of questioning that. Sometimes it can be something else is sucking money, and he's got to generate some liquidity to cover something else, which –

You know, it can tell you that's a problematic seller. You know, there's a lot of, and sometimes money is going from one business to the other. They'll show you a tax return and say, yeah, this is an ad back because I take money out of this business and I put it into that business. And by the time you look at it all, it's just really tangled up mess. So that could further complicate the situation for a buyer to really understand what they're getting. It is a bizarre phenomenon you'll see in these resort towns where there's like a family or a guy who,

or a lady for that matter as well, who like you go in there and they own like the neighborhood deli, they own the real estate brokerage, they own the cleaning service. The town has 9,000 people in it and they are 40% of the economy by themselves. And everybody knows the Johnsons or the Edwards or whatever the last name is because they're the ones that's like, oh yeah, you call the old man Edwards, he owns the cleaning thing. They like own every small business in the town.

And the reason that happens is because the town is just at a size where it's not big enough to support somebody, you know, unless they own multiple businesses. So like their mode is that the town is so small and they could just be like, okay, well, we're going to be all the commerce in this town. We're gonna be the Walmart of this particular town. It's kind of fascinating. Maybe this guy's that guy because he's in like four or five different things all around this stuff.

I don't. So I'm kind of thumbs down on this. I think Tim would probably be a really interesting guy to talk to and just hear what all he has going on. I think it would be really, really interesting. This just seems like a really difficult. I guess maybe the one value that I could see on this is whenever you're a distributor for certain brands like this, you usually have some exclusivity.

There's probably some value there. Like nobody can start selling, you know, Mokes and Vanderhalls in Virginia Beach or maybe close by in Virginia Beach. So there is some value there, but I just I would put this in the too hard pile.

I will tell you before asking Heather's opinion, I will, I would pass on this because it turns out people who own businesses that are car dealers, they end up making you feel like you're buying a car. That's how they know how to do deals. And like, I absolutely, that's the thing I hate most in the world. I guarantee doing business with this would be like buying a car, you know, they get out the four square and everything. Well, how much can you afford Mr. Gridley? Um, so for that reason, like, I think this is just an instant, instant pass. Yeah.

Yeah. I don't want to keep you in suspense too much longer. I am a thumbs down on this. It was that we do not accept SBA loans. It really did it. How dare you? How dare you? All right. Well, we'll wrap this one up there. Sorry to let everybody down. I mean, maybe if Bill was here, he would have decided to put out some money for this one, but...

There's a lot of these businesses out there, though, is the reality. I mean, 16 million in sales, maybe not that transferable. Like this is this is not so few and far between. Yeah, it's it's the silver tsunami argument whenever people are like, there's this huge TAM for all these businesses. Like, you should come on this podcast, listen to our podcast. And we'll like, yeah, the tsunami is full of garbage. There's a bunch of trash floating in the waves. Like you should pay attention to that.

On that note, we'll wrap up here. Heather, do you want to do the outro today? Put you on the spot? Oh, no. You're putting me on the spot. I don't even know how to do it. Oh, okay. Here's what you do. You say you just have a call to action at the end, and you just pick one of the usual ones that we do. It could be go to our website and go look at the stuff. It could be sign up for our newsletter. It could be tell us what you think about this episode, or it could be send it to a friend. You just kind of pick one at random, and then we YOLO onto the next one. Okay.

All right. Well, this was a great episode. And for those of you listening, we have a website, aquaanon.com, that has all of our episodes listed by industry. And what I've started doing with my clients when they're really interested in a particular industry is direct them right there.

listen to all the episodes that we've done on that industry and tell me what you've learned. Then come back and tell me what you're thinking about this deal. So I think it's a great exercise for those of you who didn't know we have that catalog there. So thanks for joining our episode today.