How to finance Goodwill?
Other than seller notes, what options are available for financing Goodwill and non-tangible assets?
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Question:
What options are available for financing "goodwill", other than seller notes? How do you finance the business' non-tangible assets?
Answer:
In many cases of small business acquisitions Goodwill does represent the greatest asset value. Traditional lenders will almost always want their financing to be secured by a combination of business and personal security. As such, for the business you described, chances are that everything will be dependent upon your credit worthiness and the available personal security you have to collateralize the loan.
Most prospective business buyers are not in a position where they can secure a note. That's why seller financing is your best and sometimes only viable option.
There are of course other sources for financing such as venture capitalists or angel investors; however, they usually don't get involved in small business purchases. As with family/friends, good luck...it's usually the quickest way to make enemies.
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Richard Parker author of: How To Buy A Good Business At A Great Price(TM), the most widely used reference resource and strategy guide for buying a business. He has purchased ten businesses in his career and has helped thousands of prospective buyers worldwide learn how to buy the right business for sale. He is also founder and President of Diomo Corporation - The Business Buyer Resource Center. Richard Parker is also the author of BizQuest's Business for Sale Blog |