Paying for it.
WHAT SOURCES EXIST
Your own funds Bank lending Seller financing Investor equity Asset-based finance A combination
WHAT SELLER FINANCING IS
The seller accepting payment over time.
WHY IT MATTERS
It reduces the funding required and it keeps the seller invested in the transition.
WHY SELLERS AGREE
It frequently achieves a higher price and better tax treatment.
WHAT TO ESTABLISH
Payment schedule, interest, and what happens on default.
WHAT BANK LENDING TYPICALLY REQUIRES
Demonstrated ability of the business to service the debt Security Your own contribution A business plan
WHAT TO ESTABLISH
Whether the business generates enough cash to service the borrowing after everything else.
WHY
Acquisitions fail when debt service exceeds what the business produces.
WHAT TO CALCULATE
Profit after adjustments, less your own required income, less debt repayment.
WHAT TO TEST
That figure at lower revenue.
WHY
Performance frequently dips after a change of ownership.
WHAT TO BUDGET BEYOND THE PURCHASE PRICE
Professional fees Transfer costs and taxes Working capital Immediate investment required Reserves for the transition
WHY WORKING CAPITAL IS THE COMMONEST OMISSION
Buyers spend everything on the purchase and cannot fund operations afterwards.
WHAT TO ESTABLISH
How much cash the business consumes before it generates.
WHAT TO AVOID
Funding the purchase to the limit of your resources.
WHY
The period after completion requires money.
