The structure of the sale can influence the asking price of a business. Sellers should look at the factors mentioned below in this article and rank them according to importance. This will help determine the structure of the deal. A seller can receive helpful advice from a business broker on price, terms, and the structuring of the sale of their business.
It seems that sellers are only concerned about full price. The price is just part of the equation. A higher price can be achieved if a seller is willing to accept a relatively small down payment, and carry the balance. The more cash the seller wants up front, the lower the full price. The chance of selling also decreases.
What sellers hope to accomplish in the sale of their business and the structure of the actual sale can influence the asking price. Price is important, but other factors may be more important. Timing may become more important than price if a seller has health issues and needs to sell their business quickly. Another seller may place more importance on their business remaining in the community. In this case, finding a buyer who will not move the business may be more important than price or influence it.
The structure of the sale can influence price. It can also be a more significant factor than price to either the buyer or the seller. The structure can dictate how much cash the seller receives up front. This may be more important than price for some sellers. Sellers should also be aware of how much the interest on their carry-back can add up to. Monthly payments with an above-average interest rate may be enticing if cash is not an immediate concern.
These are all examples that demonstrate the importance of the business broker sitting down with the seller to discuss the structure of the sale. During this meeting the broker will find out what is really important to the seller.
Sellers should look at the following factors and rank them according to importance.
Amount of Cash Involved
How the Business is Shown
How a New Owner Continues the Business
By ranking these items and discussing them with a business broker, a seller can receive helpful advice on price, terms, and structuring the sale.