I couldn't agree more. Most sellers start out with "I want all cash;" the smart ones (and the ones who end up with more money) offer "some seller financing for a qualified buyer."
- More potential buyers will be attracted to the offering
- The buyer will be able to pay a higher price if the can leverage their investment cash.
- The buyer will almost always need at least 10% (maybe 15%) seller financing in order qualify for SBA or even conventional bank financing.
- The buyer has more confidence in the value of the business if the seller has some "skin in the game."
- Consequently, the buyer will be more likely to not only purchase the business, but also pay a higher price.
Frankly, there is little if any risk to the seller because, typically, if the seller is "taking back" a loan of 10% to 15%, the buyer is often paying 10% to 15% more for the business than he would in an all-cash sale.
And, in those circumstances where the seller can have the debt well-secured by good collateral, an installment contract of sale with a large portion of the purchase price (40%-50%-60%) being paid to the seller over time can result in the seller getting a much higher price, a higher-than-market interest rate, and (sometimes) a more favorable tax treatment.