Business Broker Orange County - Sellers Financing Options in a Business Deal

Business broker Orange County will make it easier for you to sell your business. However, if the buyer does not have the money to buy the business, chances are you will hit a brick wall or even have to lower your selling price to accommodate the seller. This is why even when you are the one selling the business; you have to learn of the different methods that buyers can to get finances.

Seller financing

As a matter of fact, one of the most important steps when getting your business ready for sale is to help with seller financing. More and more buyers and lenders are looking up to the seller for financing as they strive to get their transaction together. In this case, the seller holds a note at the agreed interest rate for the specific amortization or term. This ranges from 5 to 10 years. Needless to say, you need to involve business brokers Orange County in this process.

The term of the sale may include a balloon payment of 3 to 5 years after the purchase. This is a method used to give the buyer time to get the business up and running as well as to establish a successful track record.

The best thing about seller financing is that it makes the bank feel more comfortable when financing the transaction. The lenders will know that they have a seller with a vested interest in the success of the business and not one who will make money and run.

SBA Loans

Another option that can be used is that of considering the Small Business Administration (SBA) lender. There are several loan options for you to pick from here. The SBA will guarantee you a portion of the loan. Here, the buyer is required to pay an SBA loan fee which allows him to get funding for the loan that the bank could not do conventionally. If the guaranteed loan is defaulted, the SBA pays the lending institution up to 75% of the deficit after they liquidate the collateral. Business brokers Orange County will help you evaluate your options when considering SBA loans.

Earn-outs

This is based on an agreed dollar amount by the buyer and seller based on the performance of the business after the completion of the transaction. The earn-outs can be structured in many ways based on the various financial benchmarks like company’s revenues, net income or gross profit. This option is used in companies that are in turnaround situations or when the buyers are buying on potential rather than historical cash flow.

Mezzanine financing

This is an alternative that a business broker Orange County will recommend if you are considering an acquisition or merger. The financing package can include interest rates of up to 30%. Lenders here are the high net worth individuals that are expecting large ROI. Limited collateral is needed hence the high interest rate.

There are many more financing options. Never make a choice in a hurry. Liaise with your business broker to know if the option is worth it or not.

Business broker Orange County

What Client’s Say

We Couldn’t Be Happier

"When we thought about selling we had no idea what our business was worth or how to go about selling. What you were able to do was to cut through the fog so that we understood the valuation issue and had a comfort level with the process. As you know we ended up selling for somewhat more than the original valuation and we got all cash and our CPA loved the way our tax liability was minimized. We couldn’t be happier!"

Over $250,000 More

"Our first contact with you shocked us when you suggested that we wait 18 months before selling because you believed that if we hit our projections that the value would be significantly greater. As it turned out we not only followed your advice but also got slightly over $250,000 more than we originally had hoped for. It is seldom that we have had the opportunity to deal with a firm that doesn’t want both money and a commitment NOW. It was clear and obvious that you had our best interests at heart."

You Got the Valuation We Agreed On

"You did a great job on the sale of our business in really beating the bushes for buyers, including a UK company that was an active suitor. You managed to get the valuation that we had all agreed upon and got it substantially all in cash and got the transaction closed with little to no problems or expensive lawyers involved."

Thank You for Handling Our Business

"Our business was smaller than what your firm normally handles but it was a BIG part of our net worth and savings. Thank you for handling our business and we were very pleased and delighted with the results."

More Than Anticipated

"Our transaction was involved as we had different corporate entities located in different states. Our only regret is that we didn’t retain your services before 2012 when we paid $25,000 to a firm in Texas that did a valuation and market analysis for us before then failing to do anything in the way of trying to sell our business. You got it sold for more than anticipated."

The Sales Process