{"id":561032,"date":"2020-09-18T03:03:07","date_gmt":"2020-09-18T07:03:07","guid":{"rendered":"https:\/\/vrbbd.wpengine.com\/vrbbmadison\/price-or-terms-the-structure-of-the-deal\/"},"modified":"2022-01-31T12:41:52","modified_gmt":"2022-01-31T17:41:52","slug":"price-or-terms-the-structure-of-the-deal","status":"publish","type":"post","link":"https:\/\/www.vrbusinessbrokers.com\/vrbbmadison\/price-or-terms-the-structure-of-the-deal\/","title":{"rendered":"Price or Terms: The Structure of the Deal"},"content":{"rendered":"
\"\"<\/p>\n

An old saying in negotiating the sale of a business goes like this: The buyer says to the seller, \u201cYou name the price, and I get to name the terms.\u201d <\/em><\/p>\n

Another saying used to explain the actual value of the term full price: \u201cIf we could find you a business that nets you $250,000 a year after debt service, and you could buy it for $100 down, would you really care what the full price was?\u201d<\/em><\/p>\n

It seems that everyone is concerned only about full price.\u00a0 And yet, full price is just part of the equation.\u00a0 If a seller is willing to accept a relatively small down payment and carry the balance, a higher full price can be achieved.\u00a0 On the other hand, the more cash the seller wants up front, the lower the full price. If the seller demands all cash, barring some form of outside financing, full price lowers \u2013 and, in most cases, the chance of selling decreases as well.\u00a0 Even in cases where outside financing is used, such as through SBA, etc., the lender will do everything possible to ensure that the price makes sense.<\/p>\n

Sellers should understand that both what they hope to accomplish in the sale of their business and the structure of the actual sale can dramatically influence the asking price.\u00a0 Price is obviously important, but other factors may be even more important.\u00a0 For example, consider a seller with health issues who needs to sell as quickly as possible.\u00a0 In his case, timing becomes more essential than price.\u00a0 Another seller may place more importance on her business remaining in the community.\u00a0 In her case, finding a buyer who will not move the business may supersede price or certainly influence it.<\/p>\n

Likewise, the structure of the deal can both influence price and be a more significant factor than price to either the buyer or the seller.\u00a0 The structure can dictate how much cash the seller receives up front, which may be more important than price for some sellers.\u00a0 On the other hand, sellers should also be aware how much the interest on their carry-back can add up to.\u00a0 If cash is not an immediate concern, monthly payments with an above-average interest rate may be enticing.<\/p>\n

These examples all demonstrate the importance of the business broker professional sitting down with the seller prior to recommending a go-to-market price.\u00a0 During this meeting, the broker should find out what is really important to the seller, as these issues may have a direct bearing on the price.<\/p>\n

Sellers should look at the following factors and rank them according to importance on a scale of one to five, with five being extremely important.<\/p>\n

\u2022\u00a0\u00a0\u00a0 Buyer Qualifications
\n\u2022\u00a0\u00a0\u00a0 Full Price
\n\u2022\u00a0\u00a0\u00a0 Amount of Cash Involved
\n\u2022\u00a0\u00a0\u00a0 Financing
\n\u2022\u00a0\u00a0\u00a0 Confidentiality
\n\u2022\u00a0\u00a0\u00a0 Commission\/Selling Fees
\n\u2022\u00a0\u00a0\u00a0 Closing Costs
\n\u2022\u00a0\u00a0\u00a0 Exclusive Listing
\n\u2022\u00a0\u00a0\u00a0 How the Business is Shown
\n\u2022\u00a0\u00a0\u00a0 Advertising\/Marketing
\n\u2022\u00a0\u00a0\u00a0 How a New Owner Continues the Business<\/p>\n

By ranking these items and discussing them with a professional Business Broker, a seller can receive helpful advice from the broker on price, terms, and structuring the sale.<\/p>\n

Copyright: Business Brokerage Press, Inc.<\/a><\/p>\n

showtimeagiryna\/BigStock.com<\/a><\/p>\n

The post Price or Terms: The Structure of the Deal<\/a> appeared first on Deal Studio – Automate, accelerate and elevate your deal making<\/a>.<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

An old saying in negotiating the sale of a business goes like this: The buyer says to the seller, \u201cYou name the price, and I get to name the terms.\u201d Another saying used to explain the actual value of the term full price: \u201cIf we could find you a business that nets you $250,000 a […]<\/p>\n","protected":false},"author":2,"featured_media":561034,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[3],"tags":[],"class_list":["post-561032","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-seller-articles"],"blocksy_meta":{"styles_descriptor":{"styles":{"desktop":"","tablet":"","mobile":""},"google_fonts":[],"version":6}},"_links":{"self":[{"href":"https:\/\/www.vrbusinessbrokers.com\/vrbbmadison\/wp-json\/wp\/v2\/posts\/561032","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.vrbusinessbrokers.com\/vrbbmadison\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.vrbusinessbrokers.com\/vrbbmadison\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.vrbusinessbrokers.com\/vrbbmadison\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.vrbusinessbrokers.com\/vrbbmadison\/wp-json\/wp\/v2\/comments?post=561032"}],"version-history":[{"count":0,"href":"https:\/\/www.vrbusinessbrokers.com\/vrbbmadison\/wp-json\/wp\/v2\/posts\/561032\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.vrbusinessbrokers.com\/vrbbmadison\/wp-json\/wp\/v2\/media\/561034"}],"wp:attachment":[{"href":"https:\/\/www.vrbusinessbrokers.com\/vrbbmadison\/wp-json\/wp\/v2\/media?parent=561032"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vrbusinessbrokers.com\/vrbbmadison\/wp-json\/wp\/v2\/categories?post=561032"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vrbusinessbrokers.com\/vrbbmadison\/wp-json\/wp\/v2\/tags?post=561032"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}