Subscribe to Inc. magazine
BUYING A SMALL BUSINESS

Business for Sale: California Comedy Club

A company offered for sale, including price rationale, outlook, and the pros and cons of such a purchase.
Advertisement

The Business A 16-year-old, 200-seat comedy club, recently named best in its region, that has featured such well-known performers as Dana Carvey and Ellen DeGeneres. The drink menu, with more than 120 cocktails, doesn't fool around. But take the snacks -- please! Food and cover charges make up only 3% and 35% of revenues, respectively, while a more dignified 62% in beverage sales accounts for the rest. An independent agent works behind the scenes, booking acts for nightly shows. After 20 years, the owner wants to give his laugh lines a rest.

Financial Summary 1992 1993 1994
Gross revenues $859,195 $745,570 $736,215

Recast earnings before $154,493 $111,376 $96,481

depreciation, interest, taxes, and owner compensation

Price $350,000, including inventory

Outlook The past four years have been pretty gloomy for comedy clubs, which during the 1970s and 1980s tickled funny bones in about 450 locations nationwide. A proliferation of television stand-up-comedy shows playing to a downbeat economy kept many clubgoers at home, and nearly half the clubs closed their doors. The decline in liquor consumption hasn't helped the situation, but this club's two-drink minimum should offset the sobering impact. Many of the club chains that crammed the market have failed, leaving the stage to the surviving independents, and observers say that a club that's held on this long will likely endure. On the freewheeling West Coast, the club is in the right place, and the 60,000-name mailing list that's part of the deal can't hurt, either. Most of the two full-time marketers and 20 part-time service staffers will stay on, and to ease the transition, the seller has developed a set of training manuals to standardize operations. Seriously.

Price Rationale The seller wants a $100,000 down payment, with the balance due over 60 months at 7%. The terms and financing are reasonable, but the price? It is to laugh. Experts say a multiple of 2.5 times earnings is appropriate, which would put the price at $241,203. The new owner will need to pull in about $1,000 per seat a year after expenses. Currently, income is much lower. How low is it? About $480. And that's no joke.

Pros The worst seems to be over, and the club is well positioned for a comeback. Comedy is all in the timing. Get it right and you'll have 'em rolling in the aisles.

Cons Flub the punch line and it's "Say good night, Gracie." -- Robina A. Gangemi

Inc. has no stake in the sale of the business featured. The magazine cannot confirm the accuracy of financial or other information offered by the seller. Inquiries should be directed to Torrence Enterprises, 815-399-4410. n




Register on Inc.com today to get full access to:
All articles  |  Magazine archives | Livestream events | Comments
EMAIL
PASSWORD
EMAIL
FIRST NAME
LAST NAME
EMAIL
PASSWORD

Or sign up using: