Taking over a business in Ibiza: how to tell if the price makes sense

Taking over an established business looks like the perfect shortcut. The premises are there, the furniture is there, maybe even the customers. You open the door and off you go.

Sometimes it really is like that. Very often, though, buyers pay a price that has nothing to do with the real value of what they're buying.

Why so many prices are out of line

In Ibiza many sellers set the price thinking about the island, not the business. "It's Ibiza" becomes the justification for any figure. And those arriving from outside, in love with the place and with no points of reference, often lack the tools to tell whether they're getting a bargain or making a mistake.

The numbers, the real ones

The first thing to ask for is the business's real figures: takings, costs, how the last few seasons went. Not what the seller tells you verbally, but what the documents show.

If the figures aren't there, or they're vague, or "the cash side can't be shown", that's already important information.

The lease

Often you aren't buying premises, but the right to take over a lease. Then the question becomes: how long does that lease run? On what terms? Does the landlord agree to the transfer? What happens when it expires?

A business with a lease that expires soon is worth much less than it seems.

Licences and permits

Does the business have all the licences in order for what it does today? And for what you want to do? A change of activity, even a small one, can require new permits. Everything needs to be checked with a professional before you sign.

Seasonality and dependence on the owner

Two questions few people ask. First: how does the business do out of season? Second: how much of its success depends on the person selling it? If customers come for the owner, when the owner leaves they may leave too.

The questions to ask the seller

Why are you selling? How long has it been on the market? How did the last few seasons go? Are there debts, disputes or works to be done? Are the staff staying?

The answers matter, but so does the way they're given.

Getting someone at your side

Taking over a business in Ibiza can be an excellent choice. But it should be done with someone who knows the island, the real prices and the people, and who has no interest in getting you to buy at all costs. The seller wants to sell. You need to know whether buying is right for you.