One interesting business story about using seller financing to sell a business is that of Jimmy Smith, the former owner of a successful packaging company called XYZ Pack. In the late 1990s, Jimmy was looking to retire and sell his business, which he had built up over 20 years.
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However, Jimmy found that potential buyers were hesitant to pay the full asking price for his business upfront, and traditional bank financing options were limited. Instead, he decided to offer seller financing, where he would act as the lender and finance a portion of the purchase price himself.
Jimmy offered a creative financing plan that included a down payment, an installment plan, and a balloon payment due in a few years. He also agreed to stay on as a consultant to ensure a smooth transition for the new owners.
Using this seller financing strategy, Jimmy was able to sell his business to a group of investors who would not have been able to afford the purchase price upfront. He received a regular stream of payments from the new owners, earning interest on the outstanding balance, while also enjoying the freedom of retirement.
This seller financing strategy turned out to be a win-win for both parties, as the new owners were able to acquire a successful business, and Jimmy was able to achieve his retirement goals while earning income from the sale. This story shows that creative financing solutions can be a valuable tool for business owners looking to sell their businesses and for potential buyers looking for a way to finance a purchase.
Note this is a fictional story to illustrate an idea.
Check out this small business valuation template to get a potential range of values that you may be able to sell your business for based on multiples of SDE, EBITDA, Revenue, and DCF.
Article found in Real Estate.
