Competing against cash offers

by a searcher

4 months ago

As a self-funded searcher using SBA debt financing, I'm competing against multiple all-cash offers on a deal I like. The seller doesn't want to wait on SBA bank to approve financing if they don't have to. How can I make my IOI competitive in this scenario? I'm thinking the following are in order of relevance to the buyer. Am I missing anything or is there another way to approach this?

a) Offer higher price than asking

b) Demonstrate willingness to close fast, with LOI exclusivity contingent upon me hitting milestones at day 30, 45, etc. so seller can get out of agreement if they don't like my progress

c) Indicate my interest in retaining existing employees and growing the business as is, compared to a strategic or PE shop that would likely cut some of the team

d) Prove relevant industry experience and competence to show that I can lead the next phase of growth for the business

1 like
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16 comments

lender from University of Missouri - Columbia

It is very difficult to compete with cash offers. There is a ton of good comments above so I won't reiterate what has already been said. My advice would be to try to truly understand what the seller is motivated by. There are some sellers that just want the highest price, some that are emotionally tied to their business and finding the right owner that will be good for their employees may be the most important thing. Try to structure your deal around what they want the most. As said above, even if the seller chooses another offer that could always fall through.

3 months ago | like reply | 0 likes

searcher from Arizona State University

Relationships. If you can connect with the seller and they feel like you would be the best person to take over their business, that goes a long way.

3 months ago | like reply | 0 likes

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