What Is The Top Strategy To Lead To A Successful Business Sale?
A business that does not use this strategy will lose 40% of inquiries compared to a similar business that has it.
Seller financing is a loanprovided by the business owner to the buyer of the business. Essentially, the seller takes on the role of the lender. It’s essential in today’s business market and it is how deals get done.
The number one reason to offer seller financing is that it shows confidence in the future of the business to the buyer and that the seller will complete the contract terms- It shows that the seller believes in the future success of the business as The seller and buyer will maintain a working relationship after the deal closes. Seller financing will reassure the buyer that the seller wants to see the business prosper.The buyer will know the seller is there for assisting the buyer in the initial period of running a new business.
The second reason is that there are tax benefits- Seller financing makes it possible to spread the capital gain out over a period of time. In addition, the seller also gets the additional benefit of income from interest over that period. Spreading out the capital gain will result in more money in your pocket.
The third reason is higher demand and a higher sales price with an expansion of the buyer pool- Industry research has shown that a business without seller financing will lose 40% of inquiries compared to a similar business that has it. A small amount of deals are done without them, as buyers today want to leverage their money. It creates lower entry costs for buyers, as it will be less money down payment for them. Seller financing is an option on the search engines and without that box being checked off, it will dilute the pool of inquiries. An expansion of the buyer pool means more competition, which means more money in your pocket.A recent report from BizBuySell, states that 74% of brokers, and 58% of business owners, reported that they believe seller financing to be either essential or important to closing small business acquisitions in today’s market.
The fourth reason is that the seller can buy back the business at a lower price-The chances of the buyer defaulting is very low as seller financing is very low risk. If they do, then the seller can buy the business back at a reduced price.