Relationships and Trust Are Key

https://benjamin-wann1.medium.com/how-to-earn-100-seller-financing-in-business-acquisition-bac934f265b1?sk=25967b75327a204da39e5be827b0d612 Many hopeful business acquirers read about completing a deal that is mostly seller-financed but find this arrangement elusive. Sellers typically want to sell their business fast, receive a lump sum payment, and clearly separate ownership before and after. Instead, acquirers usually work to find an SBA loan and hope to get a decent seller note to tie the former owner to the business's continued success. While this is a good option, it isn't the best option.

While Seller Financing can sound "too good to be true," I can vouch that it's entirely possible. Of my 3 acquisitions, 2/3 of them, especially the biggest one, were Seller Financed.

Here's Why You Want 100% Seller Financing Choosing 100% seller financing when buying a business can offer distinct advantages, especially in the context of speed, commitment, and flexibility:

Speed:  Obtaining seller financing can expedite the acquisition process. By eliminating the need for third-party lenders and their often lengthy approval processes, both parties can swiftly move forward with the transaction, potentially closing the deal in a shorter timeframe.

Commitment:  Seller financing demonstrates the seller's commitment to the business's success. By providing financing, sellers signal their confidence in the business's potential and willingness to support the buyer's ownership transition. This commitment can foster trust between the buyer and seller and pave the way for a smoother transition.

Flexibility:  Seller financing offers greater flexibility in negotiating the terms of the purchase agreement. Buyers and sellers can work together to tailor the financing arrangement to meet their specific needs and circumstances. This flexibility may include customizable repayment schedules, interest rates, and collateral arrangements, allowing both parties to structure a deal that aligns with their financial objectives.

However, it's crucial for both buyers and sellers to conduct thorough due diligence and seek professional guidance to ensure that the seller financing arrangement is fair, sustainable, and adequately protects the interests of all parties involved.  Additionally, buyers should assess their ability to manage the business and generate sufficient cash flow to repay the seller's financing according to the agreed-upon terms.

How to Earn 100% Seller Financing When I wrote the above title, I was careful to use the verb "Earn" vs. "Get" when it comes to seller financing because seller financing is a gift that is earned by doing the right things in transacting with your counterparty. It wouldn't have been impossible if I had tried to go for Seller Financing in my first deal. As a first-time buyer, I was untested and unknown. And you probably are, too.

However, I earned the respect of future sellers by completing this deal and demonstrating that I could lead and transform an organization to those around best practices and a bold vision.

Even more, by already being in the game and having gone through the SBA process, more doors opened. This significantly derisked the chance that I would take an operation into failure as I've already proved I could run a particularly challenging situation.  Furthermore, the Sellers could also see what they would become part of instead of fearing the worst. They would join an established brand and know their part in it. We would negotiate how each Seller would transition to the new organization, what they'd do, the hours they'd work, and their compensation.

Finally, I was able to earn the trust of the 2 most recent sellers by building a true relationship with them, getting to know who they were, and understanding the values dearest to them.

While the biggest deal was intended to be SBA, when it fell apart, the Seller was open to working with me on a new deal structure because we both believed a combined firm under my leadership would be better in the interests of all. Demonstrating Trust

Naturally, trust doesn't come easy. And it certainly isn't built in a short time frame by saying the right words and signaling the right virtues.

Instead, trust, in my opinion, is built by having a strong track record and reputation to go alongside your current initiative.  For anyone who knows me, I'm not "Joe off the street here to buy an accounting firm." I'm a known personality in my field, and I have years of experience in content, marketing, contributions, and recognition to demonstrate my passion for my field. Besides that, I had an impressive career where I rapidly climbed to director in 10 years before making a change.

All of that isn't to brag but to point out that when people are deciding to trust you or not with a major financial decision, they want to be able to research you. So, make yourself researchable. Be visible and be consistent. Demonstrate that you have taken actions to back up your words.

Negotiating 100% Seller Financing Compared to the SBA process, negotiating Seller Financing is a dream. Both parties share what they want the deal to look like, and then they can come to an agreement. Even better, both sides can be as creative as they like without a 3rd party telling them what they can or can't do.

Perhaps the best part is that once the terms are discussed and agreed upon, they are summarized in a purchase agreement, and the deal is done after dual signatures. It almost feels unreal how unceremonious the ownership transfer is, but it is the most user-friendly way of running and managing a business.

When negotiating the terms, it is key to note that the seller could and should be able to request more favorable terms than otherwise since they are trusting you to take over their business. While the costs may increase slightly compared to an SBA deal, the advantages far outweigh the alternatives.

Conclusion- Earning 100% Seller Financing Earning the trust of a business owner to transfer ownership to you, where they fully finance the deal, is an incredible opportunity for acquisition entrepreneurs.
This arrangement represents the best aspects of speed, flexibility, and commitment between both parties. Each side can shape the deal and business to terms that provide both safety and opportunity, making it more achievable and less risky. When you seek seller financing, find ways to build trust and demonstrate you are a trustworthy person qualified to receive such a gift.