Buying a Bay Area business?

A checklist before you sign anything — built from what lenders ask for and what actually kills deals here.

Before the first offer

The first offer is usually a letter of intent (LOI) — a short paper that locks you into a price and an exclusive while you check the books. Get these ten things before you sign one.

1. Three years of tax returns and profit-and-loss statements, reconciled to each other, plus an interim statement under 120 days old. If the returns and the ad disagree, the returns are right.
2. Every add-back evidenced. An add-back is extra “earnings” the seller put back in — owner salary, one-time expenses, personal vehicle. Each either has paper behind it or comes out of the earnings number.
3. The debt schedule, and what gets paid off at close.
4. The lease. Remaining term, options, assignment clause, rent vs. sales, who the landlord is. For food and retail, this is the deal.
5. Owner hours and a named #2. If nobody runs the floor except the seller, that is the multiple.
6. Customer and job concentration — top five. For a contractor: bonded backlog and who holds the relationships.
7. Licenses — which exist, whose name they are in, whether they transfer, and who must hold them at close.
8. The staff roster — tenure, who actually runs the operation, who leaves if the owner leaves.
9. Equipment and vehicles, with liens.
10. SBA shape. Citizen buyer, 10% down of the full project cost, any seller note only counts if they wait the life of the loan. See Rules.

Anchor on what closes, not what is asked

Bay Area listings ask ~3× advertised cash flow; deals close at ~2.3–2.4×, at 88–89% of ask, after ~six months on market. Full tables on the Prices page. A value range near 2.3–2.8× return-backed earnings is where the market actually clears — the asking price is a negotiating position, not data.

If the seller will not produce tax returns

Stop. That is the answer. A business that cannot show three years of returns cannot be financed by the bank 78% of buyers need, and cannot be checked by anyone else either.

Who maintains this site

This almanac is maintained by Cold Read, a buyer-paid advisory shop. The checklist above is literally what we do:

• Walk / reprice / proceed — we rebuild the advertised earnings from the tax returns, throw out add-backs we cannot evidence, and write a one-page verdict. About a week. $2,500–$5,000, paid before work starts.
• First file (optional) — if you proceed and intend to borrow, we assemble the SBA-shaped purchase stack the lender opens first. $3,000–$8,000.

We do not list businesses, take commissions, or approve loans — buyer side only, paid for the verdict, not the close. The right time to get in touch is when you have a specific target (listing, broker, or off-market), roughly $200k–$3M asking: Cold Read — info@memorysynchub.com.