Raising finance on Goodwill business

3 Answers

1. Why not just borrow the money privately (a mortgage) and you lend it to the business?
   Alternatively and realistically have you approached the seller? Often you can arrange finance terms with the seller, effectively an earn out secured by whatever of your personal assets they insist on!
   I would also, like you, be interested to hear stories about who is lending in this kind of situation - it will be the case that provided the security offered is strong enought there will be money around - so it would be good to know who's lending.
   1. 1
   2. 0

   Answered by Tom Jarman, September 2009   -  Contact this person
2. Thanks for the info.
   Its going to be a joint venture and I dont want to take all the risk on myself, not that I think the venture will fail. I might test the water with the seller to see if she would consider your other option but I dont think she will as she has already reduced her price significantly for a quick sale.
   1. 0
   2. 0

   Answered by Angela Brown, September 2009   -  Contact this person
3. OK - your JV partner will need to decide whether they are willing to take on risk too. If so they would need to provide some security. If they have no security to offer you will be taking on all the risk yourself whether you like it or not - so you'll want a decent commitment from him/her.
   This is how it could work. Lets say the business is for sale for £50,000. You and your JV partner each raise £10k on an additional mortgage and you find £10k cash between you. You go to the seller, explain the situation and offer £30k cash plus £5k per year for 5 years. The seller gets slightly more than they were asking for and you only have your up front stake at risk.
   Of course you still need to do your business analysis and due diligence - does it make sense - risk versus potential reward. dyor as they say.
   Good luck, Tom
   1. 1
   2. 0

   Answered by Tom Jarman, September 2009   -  Contact this person