Acquisitions Anonymous - #1 for business buying, selling and operating - The $16M Golf Cart Business That Refuses SBA Loans

Episode Date: March 25, 2025

A $16M golf cart and low-speed vehicle dealership in Virginia Beach sounds dreamy… until it’s not.Business Listing - https://www.bizquest.com/business-for-sale/new-and-used-cars-and-golf-cart-product-lines/BW1924052/Sponsored by Inzo Technologies and Hire with NearUpgrade your IT with Inzo Technologies — complimentary IT audits for searchers at http://inzotechnologies.com/Hire top-tier Latin American talent with Hire with Near — https://hirewithnear.com/Website: https://www.acquanon.com/Twitter: https://twitter.com/acquanon✉️ Subscribe to our Newsletter and get more deals like this every week: https://www.acquanon.com/newsletter🔔 Subscribe to Acquisitions Anonymous: https://www.youtube.com/@AcquisitionsAnonymousPodcast?sub_confirmation=1🎧 Listen to our full episodes on your favorite podcast platforms: https://www.acquanon.com/episodesEpisode Description:In this episode, Michael, Heather, and Mills dive into a fascinating but frustrating $16M revenue business based in Virginia Beach, Virginia. On paper, it’s a dream: an oceanfront golf cart and low-speed vehicle dealership with high rental income and exclusive distributorships. But as the hosts peel back the layers, they uncover red flags like no SBA eligibility, murky financials, and a seller with too many side hustles. They discuss the appeal of lifestyle businesses in resort towns, what exclusivity might be worth, and the dangers of unclear cash flows. A classic example of “looks great—until it doesn’t.”Key Highlights:$16M revenue dealership selling golf cart-adjacent vehicles and earning $30K/month in rentalsLocated in prime tourist real estate in Virginia BeachMultiple red flags including no SBA loan acceptance and lack of disclosed cash flowSeller has several unrelated businesses, raising questions on financial transparencyDiscussion around dealership models, exclusivity, and rental income valueInsight on how these types of lifestyle businesses can be great—for the right buyerWhy this deal gets a “thumbs down” despite some appealing elementsSubscribe to weekly our Newsletter and get curated deals in your inboxAdvertise with us by clicking here Do you love Acquanon and want to see our smiling faces? Subscribe to our Youtube channel. Do you enjoy our content? Rate our show! Follow us on Twitter @acquanon Learnings about small business acquisitions and operations. For inquiries or suggestions, email us at [e-mail]

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, demands 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 around them. Welcome back, everybody to another episode of Acquisitions Anonymous.

I'm Mills Snell, one of your co-host, 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, sales. rental business in Virginia Beach that's doing 16 million in revenue. It has some very complicated seller dynamics. This guy has multiple things going on. He's selling the business on his own. It's a really interesting business, though, because they're in kind of a captive market.

They have some captive distributorship of premium brands. 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. 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 tax of, is it buying? 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. Okay. So everyone knows that one of the first levers you want to pull in an acquisition is updating their technology. Updating their systems that might still be running on a spreadsheet or even on pen and paper. But tech is complicated. There's a lot of solutions out there. So choosing the right cloud platform, the right CRM, the right telephony, compliance, cybersecurity, not to mention implementing all that stuff. That's a job in itself. And I want to tell you about this week's sponsor, which is Nick Acres and Inzo Technologies. So Nick actually knows about all this firsthand.

He is a former searcher himself and bought Inzo Technologies, which is an IT firm for small businesses. So Nick has seen the tech challenges that searchers face when acquiring businesses. He's seen him up close firsthand because he is a searcher. Now his team at Inzo regularly works with searchers on acquisitions, offers a complementary IT audit of your target. so you can make a plan for what you're going to do on day one. Nick takes a personal interest in all of their searcher clients and draws on his own experience in the search base. And his business, Inzo, actually dates back to 1989,

even before he acquired it. So the company has deep expertise for managing the tech for hundreds and hundreds of small businesses over decades. So if this sounds like something that would be helpful to you, check out Inzo Technologies.com, I-N-Z-O-Technologies.com. Or you can just email Nick directly, Nick at Inzo Technologies.com.

All right, guys. Are you guys ready to talk about some golf carts? Or no, let's do the chitchat stuff first. How's what we 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. They should have reworded this 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. 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 there's a prime location. with Oceanfront 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, mokeamerica virginia beach.com, which I will open

that up here shortly. These moaks, I've read 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. 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 1227, 2030. The owner is retiring and is willing to offer six months of support and 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. Nuffo. 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. in Newport News, Virginia. Yep. All right. So, what are these, Heather, what do these guys do? Well, and let's hit really quick, because I don't think you said it. The asking price is $3.5 million. Oh, sorry.

Money. Who needs money? That's my motto for 2024. Well, we don't know how much they make. So asking prices, three and a half million. Inventory is $1.4 million. They have $200,000 in furniture's fixtures and equipment. Yeah.

So they're holding a $1.4 million in inventory. So yeah, it's kind of surprising that they have that little inventory doing 16 million in Topline. 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. It's, I mean, I guess it's used cars and it's this rental. And I feel like those are completely two different businesses. 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 I think, I think to clarify these, 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 moaks and the Vanderhall, they are like a, 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 like a used, you know, 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, 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, stuff like that. And you have a license plate when you drive them on the road. Yeah. So I think that's, I think that's what these are. That's basically what it is. Right.

Okay. Yeah. Yeah. And you're in a touristy area. You're in a beach town. Yeah. And it looks like they carry a handful of their dealership for a handful of different brand. So they have the moke ones that Mills likes. And then they have these other ones listed here.

There's candy, icon, Epic, Orion, Vanderhall, and Moore. So one of these pictures had a display of some of those things. So it's 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 moaks are like over 20. 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 dealerships or not bad business?

Let's put it that way. I always like 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 a number of miles or whatever, then maybe they sell them off as used vehicles to the local, you know, 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 accept it.

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 or the net income, 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 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 strong. 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. But this does not look to me like that kind of business. It looks like an SBA type of business as far as 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, yeah, it gets a little shady, cash, you know, 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 in 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, doseritas drives one of these into a tree and breaks it. And like, that just happens. And plus when you

of 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 because i'm not an auto person but 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 i'm fascinated um well they have their website i'm not breaking the rules this is their website for 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 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, 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 tradeoff 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. All right. I was close. Jimmy's name is Tim. You're right. That's awesome. That's close. His name is Tim. I don't hate this. A finance manager, a comp troller, a manager, and then maybe like another salesperson or something like that. This guy, Eddie, looks awesome. Maybe they offer financing?

Yeah, yeah. Yeah. So they're getting paid for that too a little bit. Yeah. So when you go to the beach, like growing up in the southeast, when we go to the beach, like a golf, 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.

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Tell them we send you. 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, demands going nowhere. People are going to, you know, there's a lot of tailwinds for this stuff.

Like, you have, you have exclusive rights to a lot of. 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, let's just, 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. I think this guy's making really good money. I think he's doing, making a couple million a year off this business.

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 alone 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 I, but I, 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've listed the business themselves for sale by owner. Oh, it's sale by owner. Yeah. Oh, really?

So that just further, that further infurms 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. 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 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, you know, again, if it's doing 16 million in revenue, I think they've got to have somewhere close to a million dollars in free cash flow. And they're only asking three and a half times. Could you, 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. Yeah. 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 cash flow. 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 this 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 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. Maybe something like that could work. I love what Mike would just felt.

Well, okay. Like, I know we're not trying to, like, we don't docks people on this stuff. But the guy put his name on there. So I Google him. I love it. 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 Moke 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 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 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 is, yeah. Maybe he just hasn't updated. 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 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, you know, didn't look retirement age. Yeah. And I hate to be the skeptic and I'm sorry, this is not, you know, this may not be the

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, you know, and he's got to, you know, 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 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 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 them an old man Edwards. He owns the cleaning thing. They 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 going to 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, moaks and Vanderhalls in Virginia Beach or maybe close by in Virginia Beach. So there is some value there, but I just, I will put this in the too hard, pal. I will tell you, before asking Heather's opinion, 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, that's the thing I hate most of 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? So for that reason, like, I think this is just an instant, instant pass. 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.

not accept SBA loans. It really did it. How dare you? How dare you? Yeah. 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. 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 not so few and far between. Yeah. It's the silver tsunami argument whenever people are like, there's this huge tam for all these businesses. You should come on this podcast.

Listen to our podcast and we'll like, yeah, the tsunami is full of garbage. There's a much of trash floating in the waves. Like you should pay attention to that. On that note, 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 like 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 under the next one. Okay. All right. Well, this was a great episode. And for those of you listening, we have a website, aquaanan.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.