When will I get paid?

Getting paid when you sell your business.

When you sell your business it would be wonderful if the buyer could pay you with one single payment on the day of transfer! The reality is that scenario is rare and most acquisitions are?paid for in installments. There are reasons for this, firstly the buyer will be looking to minimise their risk (as you will as the seller) and in most cases they may not have sufficient cash to make the purchase, which means they need to raise finance which can come in a number of forms, see funding below

Funding

At the level of sale we operate at buyers tend to fund their acquisitions?by using a combination of debt and assets :

Debt / borrowing sources

·???????Loans?from?sources that include banks, finance providers,?peer to peer, crowdfunding and even seller loans

Asset / cash investment

·???????Cash from the buyer, investors including angel investors and venture capitalists, asset swaps

Installments

The bigger the price tag the more likely that you will be paid?in installments over a period of time . Typically you will be paid?between 50 and?60% in the first installment, although we have seen 75% and in one case a single one.

The remaining payments?are made at agreed intervals in the sale and purchase agreement, sometimes these can be 6 monthly or yearly intervals. There can be qualifying criteria for these payments, we resist performance criteria because we believe the seller is no longer able to influence these, however every deal is different and there may be some justification, but this is all subject to negotiation

Typically the longer the purchase period the higher the agreed price and vice versa. Money the bank is tangible?rather than the promise of a potential?big pay day, so we favour larger first installments?and a shorter completion period.