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Thursday, April 30, 2009

How Much a Buyer Should Put Down When the Seller Offers Financing
Generally, most potential buyers in today’s market determine how much capital to put down on a business through offering a down payment between one third and half of the purchase price. For many businesses, this means approximately one year's worth of adjusted cash flow.
 
However, please keep in mind that there are cases where these levels of down payment will not clear the existing debt in the business. It is in your interest that the company be transferred free and clean of debt, so take this into account when you calculate the amount that you will put forth. 
Peter King  4/30/2009 3:05:00 PM 

Comments :
Response to: How Much a Buyer Should Put Down When the Seller Offers Financing
Monday, May 04, 2009
Veronica Bates says
In most transactions that I've seen, buyers are putting a substantial amount of personal cash on the line -- in many cases, their entire capital. Although this investment doesn't insure success for a business, it does mean that the buyer will work hard to support such a commitment.
Response to: How Much a Buyer Should Put Down When the Seller Offers Financing
Monday, May 04, 2009
Dave Summers says
There are many ways to structure the seller-financed sale that make sense for both parties. Creative financing is an area where your business broker professional can be of help. He or she can recommend a variety of payment plans that, in many cases, can mean the difference between a successful transaction and one that is not.

Response to: How Much a Buyer Should Put Down When the Seller Offers Financing
Monday, May 04, 2009
Jane Watson says
I find in the market that it's not uncommon for the seller to finance 40 to 50 percent of the purchase price of a business. In addition to the financing, any number of terms can be factored into such an agreement. For example, the contract might specify that you stay on as a consultant or in some similar capacity, receiving a salary through the transitional period and for several months or even a year or more after the deal has been completed.
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