Introduction

“The value of a financial asset is directly related to the ability to finance it.”

– Jacob Orosz, President of Morgan & Westfield

In this chapter, I examine each source of financing in detail, including the advantages and disadvantages of each, and how different forms of financing can be combined into some common transaction structures. We also address the following questions:

• How can the ability of the buyer to finance the sale affect the value of your business?
• How do most buyers finance the purchase of a business? 
• How much cash do buyers usually put down on a business? 
• How common is it for a seller to carry a note? If they do, what are the typical terms of a seller note?
• How common are bank loans to purchase a business? 
• Are most bank loans an SBA loan?
• What is a typical transaction structure?

So, let’s dive into financing …