Tips For Selling Your Note
HOW MUCH WILL I RECEIVE FOR MY NOTE?
How much you will receive depends on a number of factors, but you will normally receive about 50% to 85% of the balance of the note. Depends upon how the note was structured.
Even though you may receive less than the balance of your note, most business brokers contend the total cash you receive from the down payment and from the sale of the note will usually be about the same amount as you would have been received from an all cash sale of your business. That means that even if you sell your note for a discount you will be in about the same cash position as you would have been if you had waited for an all cash buyer for your business. But, by offering seller carryback financing you accomplish the following:
Greatly increase the number of potential buyers for your business.
Sell your business faster and at a higher price.
Have the option of keeping the note for future income.
You don't have to sell all of your note. You can sell just part of it. In fact, it's to your advantage to sell just part of the note if you need less cash than you would receive by selling the whole note. If you choose to sell just part of the note, you have two future options:
You can collect the payments remaining after the investor has received the payments you have sold.
You can sell the remainder of the note at a higher price than you would have received for that portion of the note if you had sold the whole note. This is true because the portion of the note you keep becomes more valuable as time passes.
WHEN SHOULD YOU GET US INVOLVED IN A TRANSACTION?
The short answer is: Anytime!
We prefer notes that have been in existence a few months, but we welcome the opportunity to get involved as early as when the business sale transaction is going together. Sometimes we get involved even before the business owner has listed his business for sale. Here are some ways we can be helpful to a business owner and his advisors prior to the sale of the business:
We can advise the business owner about the advantages, as well as the risks, of carrying back a business note.
We can help structure the business sale transaction and the carryback note to make the note safer and more valuable to the seller. We will do this even if the business seller does not intend to sell the note.
We will review the business and decide if it is one on which we want to own a note.
We will review information regarding a potential buyer and decide if we want to hold a note on which he or she is the payor.
