“Seller carry” is a legitimate way to secure a business purchase in certain scenarios. It basically consists of the financing made by the selling party of a portion of the sale over an extended period.
This might be a reasonable course of action in the event that:
* The buyer doesn’t have all the funds available
* The bank won’t lend the remaining amount
* The seller, nonetheless, still wants to go ahead with the sale
Notwithstanding, there is a lingering temptation on the part of investors to keep sellers on a leash via a _seller carry note_ that could function as an additional “warranty” of sorts, beyond whatever other warranties found in the Asset Purchase Agreement (APA in short). If a seller agrees to the issuance of this seller carry note, the buyer is thus reassured that the former will not try to “cut and run” when serious problems arise.
There is nothing wrong with exercising a bit of caution, particularly when you buy a business in New York City (of all places). Alas, this fear can get a bit too far and we can end up pushing away a good seller for no discernible reason.
It should not surprise us that putting such a burden on the seller is not appreciated, especially whenever the buyer has all the means to pay the required amount. When we push it too far, asking for a seller carry can become a giant deal-breaker. For this reason, business brokers advise against opting for this route save for special circumstances.
Bank Financing to Buy a Business New York City
If you decide to buy a business (NYC and elsewhere), banks actually _do _finance a large sum of the investment price, contrary to what many would believe. Most often than not, this financing represents a whopping 90% of the asset’s value, which is the maximum percentage guaranteed by the US government-backed SBA (Small Business Administration).
Unless you genuinely have a bad credit score – in which case, you’re not eligible to buy a business in New York City in the first place – getting credit for a sizable portion of a small business’ purchase price should not be overly difficult. A competent business brokerage firm can offer assistance in this regard and direct you to highly affordable and reliable lenders.
Situations could arise, however, in which investors don’t have the remaining 10% or they need to fill a 5% gap, in which case, seller carry notes are a good alternative. Be advised that seller carry notes should not wholly _replace_ the loan but rather serve as a means to mend the fence when available funds are not enough.
The only reasons you’d want the seller to assume an exceedingly high percentage of your purchase in lieu of a bank is because:
* As said earlier, you don’t trust him/her; or
* You’re not actually a suitable buyer under the criteria set out by virtually every professional business broker, to begin with, if only because you’re not in good standing with financial institutions
Either way, the seller’s confidence in you wanes and he/she might even feel offended by the proposal. It’s one thing to abide by the “settled accounts keep old friends” motto, and another one to go the extra mile and call good faith into question beyond necessary.Read More
Owning a business, especially in a place as busy as New York City, can take a toll on your mental health. Sometimes, even successful entrepreneurs need to take a long break, touch grass, or ultimately retire from the strenuous routine of managing and overlooking an entire operation from Monday to Monday.
Whenever you feel you’re spending too much on your medical bill due to stress, perhaps it’s time to call it quits and find someone else to take the burden. Many newcomers in the business field are opting for buying a business in New York City rather than doing their own startups.
These are the tried-and-true methods for finding a suitable buyer.
1. HIRE A BROKER
Believe it or not, selling a business is not as easy as placing a price tag on a wall. Someone looking to buy a business (New York City-based especially) is going to make sure that the company you’re selling is legit and that the pricing is accurate.
Another thing to be mindful of is the increasing amount of regulation that exists on the matter and the enormous task of trying to make sense of it all, both for selling as well as for buying a business (in New York City and virtually every other major city in the US).
Business firms are theoretically staffed with the right personnel to deal with these hot topics. Also, they have the tools to find buyers with the correct criteria that would be highly interested in your trade. They’re also well-versed in how to handle proper business valuation, a task that involves much more than just looking around the premises and going by gut feeling.
2. WORK WITH A PRIVATE EQUITY FIRM
While it might be more profitable to find people who are looking to buy a business New York City private equity firms might just be an option when no other buyer is on sight.
But, there are some things you won’t be able to sidestep, such as the demand on the part of some PE firms to keep the previous owner around to run operations in exchange for some earn-outs as compensation. PE firms may also “fire you” if you don’t deliver satisfactory results that can be reflected on paper, which can be a bit frustrating.
In short, if you opt for a PE firm thinking that it’s the quicker route, tread carefully!
3. LIST YOUR BUSINESS
Do you want to do it on your own? Consider websites such as BizBuySell.com for listing your business.
People interested in buying a business in New York City should be able to find you easily, but you’ll probably need to pay a fee in order to appear among the first results of a search, to be featured on the first page of the portal or to simply have your company listed. Yet, it’s very probable that you will spend less on these fees than on hiring a broker, though, which is a plus.
Keep in mind that you’ll be in charge of filtering potential buyers and setting up meetings with inquirers and potential buyers, among many other responsibilities.
4. FIND A RELATIVE, PARTNER, OR ACQUAINTANCE.
Instead of trying to find anonymous people looking to buy a business (New York City can be a tricky place to secure safe deals with strangers), you could instead spread the word around your family circles in search of potential buyers that are trustworthy and probably won’t be as picky.
Nevertheless, while the idea of keeping your business in the family could sound enticing, be prepared for a discounted sale. Consider it as part of the fee you’ll have to pay to speed the process up.
Another option is to sell your portion of the company to your partners, provided that they’re interested.
Finally, one of your employees may be experiencing a lucky streak and potentially would be interested in buying a business in New York City. Perhaps he/she could buy yours!Read More
Starting a business may seem like the obvious choice for many aspiring entrepreneurs. After all, many businesses started from scratch and were able to succeed. Nevertheless, nowadays, it’s much easier to buy a business in NYC than to set up a new one.
Surely, this could mean that you won’t get the moral recognition of having been able to erect an emporium with your bare hands, but you’ll get added benefits that will definitely help you overcome the typical entry barriers, meanwhile increasing your profitability in the short term.
As stated earlier, you get a myriad of advantages when deciding to buy a business. NYC is a difficult place to do startups owing to the overwhelming amount of competition in virtually all areas. However, business selling is a very common practice in big cities such as these.
Among other advantages of purchasing a business, you’ll get:
BETTER ACCESS TO LOANS TO BUY BUSINESS (NYC-BASED) OVER STARTUPS
To earn money, you must lose some. At times, even more than what you may have available. This means that you will require a loan to get you started.
Businesses that already have an existing structure can show a more tangible potential for return of investment, which means you’ll get green lighted more easily by banks than by simply showing some abstract projections that they may deem too risky or adventurous.
AN ALREADY ESTABLISHED BRAND
Within the purview of marketing, there is an excessive amount of advertising. Even in this day and age of free social platforms, you will struggle to make a name for yourself or to get spotlighted.
When you buy a business in NYC, you can reap the rewards of months or probably years of advertising work that have cemented the brand in the minds of a large portion of the target audience, especially in such a populous city.
This business most likely has an existing user or customer base, its own social media accounts with large followings, and a functioning thriving website that copes with heavy traffic.
AN OPERATIONAL BUSINESS
If you resolve to buy a business in NYC that has an existing operational structure not only will you be able to save a lot of money, but also time and frustration.
All the time it takes to devise working strategies (and going through failed ones), hire personnel, set up bank accounts, arrange departments, and file paperwork (especially in New York), apart from laying out publicity and advertisement strategies (as explained above) was, for the most part, spent in advance, so you will only have to worry about what’s ahead and how to improve your business model.
Get Professional Help
Are you in NYC and wish to buy a business? New York City business brokers are your best choice. With the assistance of a reputable brokerage firm, you’ll be capable of landing the best deals, as they help you sift through all the possible matches to find those that fit your exact search criteria.
Also, brokers accompany their customers every step of the way and have sufficient technical knowledge to get them through the most complex phases in the whole process, including bargaining, financing, and dealing with all the administrative paperwork.Read More