The Dos and Don’ts of Seller Financing
By Mike Handelsman, General Manager, BizBuySell
In today’s tight business-for-sale marketplace, an owner’s willingness to finance the sale gives him or her an edge over the competition. But owner financing isn’t for the faint of heart. To stay on track, sellers need to follow some obvious – and some not so obvious – dos and don’ts.
There’s nothing more frustrating than a listed business that attracts a lot of attention, but no buyers who are willing to seal the deal. Unfortunately, that’s exactly the situation many business owners are facing in today’s marketplace.
Most of the time, the business isn’t the problem. In fact, a business that generates significant attention in the marketplace is usually a good candidate for a sale. Instead, the issue is most often the buyers’ inability to secure financing at the owner’s asking price. That leaves owners with two options: Either lower the asking price or work with the buyer to overcome sale barriers.
Rather than leaving money on the table, many owners are deciding to finance the sale themselves. Is it a gamble? Absolutely, but under the right circumstances it can also be a financial boon. If financing the sale of a seller’s business sounds like a good idea, don’t make another move until you’ve carefully considered the lessons being learned by other seller-financers.