Selling Financing: How to Best Navigate The Complex World of Financing With Sarah Grossman

Jennifer and Eric talk with Sarah Grossman, a CBI Principal at BayState Business Brokers. Sarah has worked with both Jennifer and Eric on a number of client projects. She has over 15 years of experience and is very knowledgeable about her field and is excited to share with you how businesses get bought and sold. On this week's podcast, you'll learn the benefits of a seller note, why this can be a good thing for both the buyer and seller and how it can be used to mitigate your tax liabilities with a seller note.

Key Points

[1:40] What is seller financing and how is it used in a deal?

[4:15] What happens if a buyer is unwilling to do a personal guarantee on a seller note?

[6:30] How does Sarah prepare her sellers for a seller note or even approach them about the benefits of one?

[9:10] What are some of the risks of having a seller note?

[10:25] There are ways to creatively structure the note so that both sides up being happy with the terms.

[10:35] Would a buyer care if their seller is doing seller financing?

[13:25] Sarah shares an example of how seller financing works in real time.

[15:35] What types of due diligence should a seller be doing on the buyer?

[20:00] The seller note is just a good option to have for both the seller and buyer to get the deal done.

[21:35] Sarah shares how you can mitigate some of your tax liabilities with a seller note.

[24:00] Sarah shares some additional examples of how people can leverage and beneficially use seller financing.

[27:45] Seller notes also help make sure the transaction process itself goes really smoothly and that there are no unexpected skeletons in the closet.

[31:30] Deal structures have gotten really complicated due to the ripple effects of businesses being shut during COVID. People want better guarantees that their business is going to perform.

Tip of the Day:

Don't wait till the last minute to engage in a sale with your broker. You should be talking to them about it 1 to 5 years out.

Mentioned in this Episode

Tworld.com/locations/boston

Riw.com

Transactiontalk.com

Sarah Grossman

Website

LinkedIn

Phone: 617-562-5700

Email: Sarah@Baystatebusinessbroker.com

Disclaimer:

The material on this site may be considered advertising under the rules of the Supreme Judicial Court of Massachusetts. This site is solely for informational purposes and provides general information only. Nothing on this site should be construed as legal advice or consultation either generally or in a particular case. Neither the receipt nor the distribution of materials constitutes the formation of an attorney-client relationship.

Quotes

"If for some reason the buyer defaulted, the seller has; instead of recouping the assets; they can resell the business to somebody else and they're keeping all the money that they've already gotten."

"The seller note is a good tool to have at your disposal in case there is a surprise, but no one goes into it wanting that surprise. It's just good to know that it's an option."

"It underscores the importance of having really good advisors. Deals are more complicated now than I've ever seen them in terms of structure."