
Your average buyer would have no way of knowing whether the business is priced fairly. How then does a buyer determine if the business has been priced fairly?
I can help you determine the fair price of a business.
Businesses are priced according to multiples of cash flow.
Due Diligence is the process where a buyer whose offer has been accepted by the seller, may examine all of the business financials.
Businesses that are LENDER PRE-QUALIFIED have had their last 3 years’ financials thoroughly examined by an SBA lender (bank). The bank focuses on whether there is enough cash flow for a buyer to make payments. After confirming there is sufficient cash flow for payments on a business loan, the SBA bank will loan the full asking price with only a 10% down payment.
Because the bank has reviewed the financials – much like a buyer would do themselves during due diligence, the bank will usually loan from 3x-5x cash flow for the purchase of the business.
For example – a business creating $200k cash flow would be minimally priced at $600k with only $60k down.
BUYING A LENDER PRE-QUALIFIED BUSINESS ELIMINATES A BUYER HAVING TO PROVE CASH FLOW DURING DUE DILIGENCE.
ADVANTAGES OF BUYING A LENDER PRE-QUALIFIED BUSINESS:
- Financials have been reviewed and approved by the SBA lender (bank)
- SBA will loan FULL LISTING PRICE of business.
- SBA requires only a 10% down payment to a buyer
- Lender Pre-Qualified purchase simplifies Due Diligence – SBA lender has already determined cash flow and has approved a fair selling price based on the true business value.
Call me today at (727) 946-1183 to get started.