http://www.murphybusiness.com.
Offering Seller Financing can be of great benefit when selling your business.
It is very common for the sale of a small business to include seller financing as part of the deal. In fact, in many cases this is the only way the deal will get done is if the seller is willing to hold a note for the business or if the owner finances part of the business purchase. A seller who demands an all cash deal will usually receive a lower price for the business, sometimes as much as 30% to 40% lower.
Seller financing can accomplish several goals from a buyer’s perspective. First of all, a buyer always faces the risk that the success of a privately held business is directly tied to the involvement of the business owner. By having the seller finance a part of the purchase price, this gives the buyer additional confidence that the seller believes that the business can thrive without him. Additionally, seller financing can oftentimes assist a buyer to pay more for the business than the price that would be offered if the deal were financed only through traditional financing sources, such as a bank.
Just as a buyer will conduct due diligence on the business, a seller should conduct due diligence on the buyer. Review the buyer as any business would review someone they are lending money to. With permission, you can obtain their credit scores and you may also ask for a financial reference from the buyer from their financial planner or CPA as well as business references.
Also, by using a savvy lawyer familiar with seller financing, your agreement can leverage the buyer’s assets and securitize the loan, further limiting your liability.
Seller financing can be risky, but with a few simple steps, you can verify the buyer’s ability, secure the financing and even reduce your risk.
If you are considering selling your business, please contact us at 888-561-3243 for a private consultation to discuss your options and learn how to limit your liability and get your business sold.
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http://www.rogersonbusinessservices.com/services/sell-a-business
Seller finance is a great tool and benefit to a seller when trying to sell their business. This short video explains why.
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