Financing the Purchase

Will the owner finance the Purchase of the Business?

It depends upon the following factors:

  • The amount the buyer is willing to pay

  • The credit history and score of the buyer

  • The buyer’s experience in the industry

  • The relationship that forms between the buyer and the seller during the negotiation and sales process

  • The Business Broker’s ability to convince the seller of the buyer’s ability to pay back the loan.

  • The buyer and the seller’s willingness to have the seller continue working in the business as an employee.

  • The knowledge and experience the Broker/Consultant and the attorney have in creating structures and corresponding strong legal contracts that protect both the buyer and the seller.   

Most owner’s initial reaction to having the buyer pay in installments is a “Loud NO! Absolutely Not”.  However, an experienced broker will explain the benefits of financing and have creative ways of safeguarding both parties during the transaction. The broker’s experience here is a key factor because he must understand the dynamics of this part of the sale, explain the benefits of owner financing to the seller, and the structures the Broker can create which the business transaction attorney will then create contracts to enforce that will reduce the risk and problems associated with this type of transaction.