I bought a $2M business without a bank
I didn’t pay cash either…
So how did I do it?
The seller and I drew up a simple payment plan to buy his business:
There are 3 parts of the plan:
1/ Down payment
Most banks require 10-20% cash down to buy a business.
That'd be $200k to $400k for a $2M deal.
But since we weren’t using a bank, we could do anything we wanted.
The seller didn’t want a bunch of cash up front, and I always try to put as little cash down as possible.
So we agreed on a $50,000 down payment
I’ve never done "no money down" but 2.5% is pretty darn close!
2/ Monthly payment
The seller was going to retire after selling me his shops
So he wanted a monthly payment that would support his retirement lifestyle
I wanted a monthly payment that the business could afford
We agreed on $12,500 per month
At the time, the business was making about $50,000 in monthly profit.
The debt payment represented 25% of the profit, leaving me with 75%
The max I’ll ever do is 50% of the profit, so I was good with 25%
3/ Number of payments
The seller wanted as many payments as possible since I was his retirement plan
The length of the agreement is also a factor of the total purchase price.
Price: $2,000,000 - Down: $50,000 = Balance: $1,950,000
$1,950,000 / $12,500 payment = 156 months (aka 12 years)
So we agreed on 156 monthly payments
4/ Putting it all together
The lawyers drew up all the paperwork, we signed, and I got the keys.
This was just one of the many “payment plan” deals I’ve done in building my company to over $55M/year.
Want to learn more about seller financing?
I’m hosting a live workshop in a few weeks to cover everything you need to know to land deals just like this one.
Click here to get on the waitlist so you don’t miss it
Cheers!
Brian