Posted 11-10-2008 5:17 pm by
Are you trying to figure out how you will pay for the business you want to buy? If so, you may be surprised to learn that there are many different payment options available to you.
Are you trying to figure out how you will pay for the business you want to buy? If so, you may be surprised to learn that there are many different payment options available to you. In addition, many experts recommend only paying for 30 to 50 percent of the business cost with cash and then financing the rest of the purchase. Although you can certainly turn to traditional lending options to help you pay for your purchase, there are many alternatives to cash that you might want to consider exploring as well.
Using the Seller's Assets
Rather than financing your business purchase, you might want to look into using the seller's assets to help you pay for your new business. Remember, once you purchase the business, you own those assets. If you make a list of these assets as well as your business liabilities and use that information when seeking out financing, you may find them to be more receptive to lend you the cash you need.
Buying with Someone Else
Rather than stretching yourself too thin and trying to purchase the business on your own, you may also want to consider getting someone else to help you with the purchase. If you don't already have someone in mind to purchase the business with you, talk with the seller and find out if anyone else has expressed interest in the business but didn't have the necessary funding. That person may be interested in purchasing the business with you. Just make certain to have a lawyer write up an agreement with a buyout clause before forming a partnership.
Taking Advantage of Employee Stock Ownership Plans
Employee Stock Ownership Plans, or ESOPs, can also help you obtain immediate capital. In order to accomplish this, you simply sell stock in the business to its employees. By selling only non-voting shares, you retain control of the business while gaining instant cash. With this method, it is possible to obtain a business for just 10% of its purchase price.
Leasing with Options
You might also want to explore the possibility of leasing the business with the option to buy. With this method, you make a down payment on the business and become a minority stockholder. This way, you can operate the business as if it is your own without having to come up with as much money upfront.
Assuming Liabilities
You may also want to consider assuming liabilities or declining receivables when purchasing a business. This way, you can significantly reduce the selling price of the business. Just be certain the price reduction is worth the cost of the liabilities you will be taking on.
Obviously, you will also have the option to explore traditional loans from lending institutions to help you pay for the cost of your business acquisition. Nonetheless, if you can find other creative methods for funding your costs that can help you avoid taking out a loan, you just might put yourself in a better situation for making money off of your new business right away.
AARON MULLER| ADVANTAGE COMMERCIAL BROKERS
BUSINESS BROKER, COMMERCIAL PROPERTY SPECIALIST
DIRECT: 425.766.3940
FAX: 425.882.2547
CHECK OUT MY LISTINGS AT www.acbrokersinc.com
