[cashflyer]

My business partner is looking at a company that is for sale.
Asking price is $1.8m

Net profit last 5 years are:
$125k, $175k, $169k, $189k, $153k

One owner/FT employee, one hired FT, one hired PT.
Hard assets (equipment) value is ~ $620k
Facility is leased, long term, assumable.
Business is all word-of-mouth, website, walk-in. No contracts.

In my thinking, the company is overpriced.
A) If you liquidated the assets, you still have $1.2m of debt. So the cost is not fully collateralized, and it will be hard to get a loan.
B) If you do get a 15 year business loan for the $1.8m, your loan payments would equal or exceed your profit - meaning you would be n the red all the time. IF you can inject cash for 15 years, then one day you hopefully start making a profit.

Am I overlooking something / anything?
Or am I correct to advise him to cut this fish loose?