Your complete guide to retail business transactions. Valuations, inventory management, lease considerations, and expert resources.
Illinois has a diverse retail landscape with over 35,000 retail establishments ranging from boutique shops to large specialty stores. From Chicago's Magnificent Mile to small-town main streets, retail businesses serve communities across the state.
Retail businesses include specialty shops, boutiques, general merchandise stores, sporting goods, clothing, home goods, and more. These businesses require attention to inventory management, lease terms, and evolving consumer preferences.
| Valuation Method | Multiple Range | Notes |
|---|---|---|
| SDE Multiple | 1.5x - 2.5x | Seller's Discretionary Earnings |
| EBITDA Multiple | 2.5x - 4.0x | For larger operations |
| Inventory | At cost | Usually added to business value |
Selling a retail business requires careful preparation and understanding of industry-specific factors:
Acquiring a retail business offers opportunities but requires thorough due diligence:
Fashion boutiques and clothing stores.
Home goods, furniture, and garden supplies.
Sports equipment and outdoor gear.
Gift shops and specialty retailers.
Electronics and technology retail.
Variety stores and general retail.
Inventory is typically valued at cost and added to the business purchase price. A physical inventory count is conducted near closing. Obsolete or slow-moving inventory may be discounted. The purchase agreement should specify how inventory will be valued and counted.
Key lease terms include remaining term (5+ years preferred), renewal options, rent as percentage of sales (under 10% ideal), assignment rights, exclusivity clauses, and CAM charges. Have an attorney review the lease before purchasing.
Retail businesses are typically valued at 1.5-2.5x SDE plus inventory at cost. Key factors include location, lease terms, inventory quality, brand strength, and e-commerce presence. Businesses with strong online sales may command higher multiples.
SBA 7(a) loans are popular for retail acquisitions. Inventory financing can help with working capital. Seller financing is common. Some buyers use a combination of SBA loans, seller notes, and personal funds.
Get expert guidance for your Illinois retail transaction.