Sell Your Business at a Premium by Understanding Buyer Financing
Updated on April 2, 2026
Transcript
Hello, and welcome to another episode of the Opportunity Podcast. I’m your host, Greg Alfred, the Head of Marketing over here at Empire Flippers. And today, at least if you’re watching this on video, you might notice a little bit of a different background. That’s because I’m actually at a conference right now. I’m recording this in a hotel, and I thought it’d be fun to turn an episode into a conversation I’ve been having quite a lot at these conferences.
The conversation is: how do I go about selling my business to get the most amount of money up front, and make it as frictionless as possible to get this life-changing exit? I thought it’d be fun to turn this into an episode—kind of the advice I’ve been giving to other attendees at this conference.
One of the biggest pieces of advice—and this is a relatively new revelation to me, even though it makes a lot of sense; I just never thought about it this way until recently—is to think of yourself in the buyer’s shoes. Not just in the buyer’s shoes, because that’s common advice I’ve given a lot over the years as a business broker with Empire Flippers, and as a marketer, as someone who helps people sell their businesses.
But think about it in terms of: how do buyers buy businesses? What are the buyer tools that are available? The more you know about these tools and understand them, the easier it is to become someone who exits your business for a very high price.
For example, let’s say you have a $2 million marketing agency you want to sell. If you don’t know anything about buying businesses, you could come to someone like us—and obviously, we’re going to help you do it. But even if you are using someone like us, knowing how a buyer buys can still help you get a better deal.
So in a $2 million agency, maybe you get a pretty lowball offer where they’re like, “Yeah, I’ll pay you that $2 million, but I’m only going to give you $600,000 or maybe a million dollars upfront.” So only 50% down.
Now, 50% down is not terribly uncommon. And there are some situations where that’s kind of the best you can hope for in terms of where you are, where your business entity is, all that kind of stuff.
But if we understand the way that buyers buy—the different tool sets they have available—we can come into that conversation better prepared.
So for example, if you did an exit consulting call with me, one of the things I would tell you as a marketing agency owner is: you should have all your clients in contracts, preferably six months or 12 months. Now, it’s not easy to do. Most agency owners do not even have long contracts like that. But from a selling perspective, this gives you another buyer tool.
There are banks and lenders out there that will look at the contracts you have with clients and compare it with your churn. Like, “Oh, this person keeps clients for 18 months on average. He has all these clients on 12-month contracts, and the vast majority of them are not even through six months yet.” So this is a potential lendable thing where a buyer can take all those contracts as revenue—like “guaranteed revenue” to the bank, basically—and the bank will lend on it. They’ll give them a certain fraction, maybe 20% or 30% of the value of those contracts, to help them with their down payment to buy the agency.
So this is one of the little tricks you can do to get more financing available.
The other thing is knowing about SBA. SBA loans are awesome—an incredible leverage tool for buyers—where you can literally put down as little as 5% of a business’s value. The rest can be financed through a mixture of banks that are backed by government money, but also through a little bit of seller financing. Now, those rules are always changing, so you want to stay up to date with SBA, but understanding how the SBA loan process works is fantastic. Then you can use that as a tool.
So again, in the $2 million agency example, as long as your business is a USA entity, then another USA person can come in and get an SBA loan where they can literally give you, say, $1.9 million upfront rather than the million dollars upfront—because they can give you their down payment, which might be, say, 50 grand, and they can also give you the rest of it through the SBA loan.
And you will take, say, 100 grand or something like that as a seller note that is paid out over 10 years as secondary to the SBA loan. But this gives you way more money upfront. This gives you a significant amount more upfront just by understanding how the SBA loan works.
Now, if you’re going to do something like this—and we’ve done a few SBA deals—one of the things that kills SBA deals is time. SBA loans take a long time to work. You’re really looking at two to three months before the funding really gets through, because there’s a lot of paperwork and bureaucracy you have to go through to get a deal like that done.
So you as a seller need to be really, really careful. I’ve seen this blow up seven-figure deals several times over my career. If your business is growing relatively fast and the buyer is getting the SBA loan, and you’re at the very end where everything is good—but now you see, “Well, because it took so long, my sales multiple has dropped versus what it could be based on my new trailing twelve-month average.”
This is a dangerous way of thinking. I’ve seen sellers want to renegotiate their price, and they have good points—like, “My business is more valuable now than when we first started this process.” And they’re not wrong. But the issue is, if you do that, then the entire process starts all over again. That buyer might have to spend more money on legal fees as well, because this isn’t free for them to do. There are ancillary costs involved in this, right?
Now they have to renegotiate, the entire deal has to go back to underwriting, and now you’re looking at another two or three months before the deal is done.
So my advice to you as a seller is: if you are going through that process with a buyer, maybe what you do is, “Hey, before we start the SBA process—because my forecast profit is going to be here by the end of what will probably be three months, at least, to get the deal done—let’s sign the contract knowing that is the case. And if we don’t hit that, we can lower it to wherever it is.”
Usually, that’s an easier thing for a bank to take: “Oh, you want less money? Okay, we already did all the deal for a higher amount.” So that’s a little bit easier. You don’t want to blow up your deal at the end of that financing thing.
Other things you can look at are your accounts receivable. Depending on the business you’re in, your AR can also be a financeable tool. You might be able to negotiate vendor financing, where the vendors—your supplier, say for e-commerce, for example—maybe they cut you a deal where you don’t pay for 100 or 150 days, something like that. And that brings all this extra room for that buyer to just give you all this profit. But they’re the ones taking the risk with that leverage, right?
So there are all these different ways you can use these buyer tools to make your business more sellable, for one, because there are more options on how to actually get into the deal, but potentially also to give you more money.
Another thing is revenue-based financing. If you understand how RBF works, and you actually know providers in your industry—because they tend to be pretty industry-specific—then these are people you can hook a buyer up with. Or you can look at things like corporate lines of credit and credit stacking, all that kind of stuff.
If you’re doing a stock purchase sale—where you’re actually selling the entity to the buyer, where they’re taking over the entity rather than just the assets—there is a possibility where they could immediately launch new corporate lines of credit and use that credit to pay you.
Now this sounds kind of like, “Well, isn’t that just the business paying for itself?” And yeah, it is. And most business buyers—at least the really prolific business buyers—want to use the business as much as possible to buy the business rather than their own personal money. They’ll use OPM as well from other sources, like bank loans, for example—other people’s money, right?
But they are always looking at: how can I minimize my own personal capital into the deal? And they’ll leverage the business up.
When it comes to leverage, usually, from a buyer perspective, I would recommend you’re never putting more than 50% of the cash flow as leverage. I think that is a relatively safe amount and is enough to really make a difference in terms of juicing your returns.
But some buyers are like, “Hey, screw it, let’s do like 99% leverage,” and they go all the way. I have a buddy who does really well buying businesses, and he’s leveraged to the hilt. That’s not something I would recommend for most buyers, but he knows what he’s doing, so he’s okay with the risk, right?
From a seller perspective, it doesn’t really matter as much because if they are leveraging that much, usually that means you’re getting pretty much your full price, or pretty close to it, as money in your pocket. So their leverage—their risk—actually isn’t that big of a deal for you, in a certain sense, because you’re going to get paid for it.
So when you see, as a seller, any video where someone is talking about $0 money-down deals, or “I bought this business for a dollar of my own money,” or whatever—you should watch those videos, because those deals do happen.
Now, those deals tend to happen with pretty experienced buyers and in very niche situations. It’s not something I would say is super, super common, but if you learn the strategies that they’re using, you’ll quickly find out that “$0 down” just means they’re not putting any of their own money into the deal. They found another way of getting money into the deal, and you yourself should learn how they do that. So when you go and sell your business, you can get a much bigger amount of money.
Now, there are a couple other tools you might want to look at. In terms of flexibility, the two most common tools I would say in buying businesses are going to be seller financing and earnouts.
Seller financing is very simple: you as the seller are acting as the bank. So $2 million agency: maybe they put down $1.5 million and they’re going to pay you $500 grand over a period of two years, something like that. I would say that’s a pretty vanilla deal structure.
Now, where understanding seller financing comes into play is you can actually charge interest on that. Most Main Street businesses I’ve seen that do seller financing to get a deal done usually have some kind of interest rate that the buyer is paying. Weirdly enough, when it comes to digital businesses, it’s not very common.
I’m sure we’ve done it. I mean, we’ve sold over 2,400 businesses at this point, and this is something we’ve recommended before to our sellers. But most of the time, sellers just give away the seller financing at 0% interest. And I think that’s a real lost opportunity because you are taking extra risk.
Now, if you come to a buyer and they’re going to give you $1.5 million and $500k seller financing—great. You can say, “I want this interest rate on the seller financing.” That might make the buyer stop and think a little bit, right? I’m not saying it’ll kill the deal. It’s a reasonable ask.
But you might say, “Hey, look, I’ll give you 0% seller financing if you throw in another 200 grand.” So instead of it being $500,000, it’s $300,000 for seller financing. So you can use the tool of seller financing by wanting interest—and still do a 0% interest loan—but get an extra $200,000 upfront because the buyer really doesn’t want to pay that interest, right?
This strategy you can use, and it’s all about being flexible. One: you want to make sure the buyer can do the deal. But you also want to make sure you get as much as possible upfront.
There are certain scenarios where maybe you don’t want that—maybe for tax reasons. I’ve seen seller financing go as long as 10 years. Especially in SBA loans, it has to be 10 years, basically. But it’s all about being flexible.
And there are some sellers that I’ve dealt with who are like, “Oh, I would never accept seller financing.” And I tell them, “Okay, you will never sell your business, then. You will never pass go. You’ll never collect $200.” That’s just the nature of saying no to that.
Some of the best business buyers I know, if the seller is not willing to do at least 20% seller financing, that’s a massive red flag to them. Because to them, that means you don’t believe in this business—because that’s a significant amount, enough money that will hurt if you don’t get it. If you don’t believe in the business enough where you would never accept 20%, then that buyer is like, “Okay, well, I’m not going to go any deeper into this business. I’ll move on to someone else who, in their mind, is more reasonable,” right?
So you want to be flexible when it comes to selling your business. And understanding seller financing and earnouts are two of the easiest ones, because again, this is the most common.
Now with earnouts, let’s say again: $2 million agency, but you really want $2.1 million. But the buyer’s like, “No, it’s only worth $2 million.” Then that little extra $100,000 might be negotiated as an earnout where the business must hit certain revenue or profit targets. Usually it’s going to be tied to revenue, and then you get paid.
So earnouts are very useful if you are at an impasse with a buyer. Say you have a buyer you really, really like. They have the ability to pay a certain amount that’s reasonable to you, but not the certain amount that you really, really want. You can use this earnout as a bit of a hedge—a bridge, if you will—between your asking price and what they’re willing to pay.
And you safeguard them, because what are they worried about? They’re worried about their capital and overpaying for an asset. So if you set up the earnout so that as long as it hits these targets, it’s no big issue for that buyer to pay you because the business is doing well—then that’s a lot more palatable to the buyer.
And buyers, by the way, will use earnouts this way too—to try to talk down a seller who’s a little bit delusional about their price. Sometimes they’ll use the earnout as a tool to mitigate capital risk because they know there’s no way the business is going to hit this outlandish number that the seller told them. So they’re not going to have to pay it anyway, and they’re okay with it, right?
But you, as a smart business seller, don’t want to give an outlandish earnout. You want to make sure the earnout is realistic, that the business can actually hit that thing and give you what you want. So you might have to play with the numbers a bit to figure out how that even looks.
So those are just some of the buyer toolkit. But there’s a bunch of other things out there too. Like I mentioned: vendor financing, corporate lines of credit, accounts receivable financing, equipment financing.
If you’re, say, an e-commerce store owner that has your own factory or warehouse or something like that, that can be factored in to help finance the business.
Another thing I would really recommend—and this is kind of niche to my audience, so if you’re in a different country outside of America, maybe it’s not as relevant—I have a lot of friends that are, say, from India or Thai, or they’re European, and they have these marketing agencies or SaaS tools that are primarily selling into America.
A lot of times they’re incorporated in whatever their country is, which makes sense. But if you want to sell your business, most likely the business buyer—at least some of the best business buyers—are probably going to be in America.
I would recommend looking into setting up a USA entity that is the actual business you are going to be selling, rather than, say, your entity in India. Because just by being a USA entity, it opens up the doors for the buyer to get more financing opportunities.
So I have a friend—his entity is not in America—but it’s a pretty big business. It’s not eight figures, but close to eight figures probably by the time he sells. And he’s going to have to basically accept getting like 50% upfront as a good offer in that case because it’s not an American entity, which means there’s just not as much financing potential available to the guy. So he has to be okay with that to be able to sell the business to probably who is going to end up buying the business, which is going to be an American person, right?
So these are just some concepts, and there’s a lot more—tons of other financing strategies. This is just a small taste of what’s out there. Again, the most common: seller financing, earnouts, and SBA.
But the more you understand how buyers buy businesses, the easier it is for you to actually sell your business at a premium.
And this also goes to why the buyer is buying the business in the first place. Most business buyers are buying a business because they’re looking for a machine of leverage—a systematic machine that prints money, right? That has good cash flow, and ideally something that they can grow, that has room for scaling, right?
So if you position your business in that way—and I often joke, you want to be the most useless person in your business. It’s a little tongue-in-cheek, but it’s true. If you truly are the most useless person in your own business and it’s successful, that’s awesome from a buyer perspective because you’re not usually going to come with the deal, right? You’re going to be gone once they acquire the business. So the fact that you have very little impact on the business now is a very good sign that you have a machine—something that is leverageable—that the business buyer wants.
So that’s some of my quick tips for you: learn all the different buyer strategies, all the different buyer financing tools, and that is going to significantly help you. Because most people that buy businesses, they are brand new to it—at least a lot of them.
At Empire Flippers, we have more first-time business buyers than probably almost anywhere else that I can think of. And we guide those buyers on what to do, all that kind of good stuff.
But you might be in a position where maybe you’re not using Empire Flippers, right? Maybe you’re doing a solo, private kind of deal, and knowing these different tools can really help you get a deal done where the deal might not have been able to get done.
Maybe the buyer just simply doesn’t have enough cash as a down payment. So you coming in like, “Hey, I know about this, this, and this,” and if they’re willing to do that and they say, “Great,” then there you go—you saved the deal.
Most business deals, in my experience—especially when you get to seven figures and up—are going to have some element of financing. Usually it’s going to have multiple different ways of financing.
That’s another mistake people sometimes make. They think, “Oh, it’s just seller financing, the whole thing.” But yeah, you could do that—you could only have seller financing. But it’s a lot more typical to have a bit of commercial debt, seller financing, maybe they raise a bit of an equity check.
Maybe you have a network of people that want to invest in these businesses that you can introduce to that buyer, and they go in on it together. Because he’s the operator. The investor is just kind of the money person. They don’t really want to run the business, but the buyer does.
So that’s another example of using buyer tools as a seller to help you sell the business and help the buyer also learn. Because again, most buyers are going to be first-time buyers learning how to get the deal done, and you can get your life-changing exit.
So much of business brokering is kind of like a puzzle. You’re trying to figure out how does the debt stack work, and how does that debt stack—or the financing stack, or the cash-down stack—work to benefit both the buyer and the seller with what they’re trying to achieve.
So a good broker is always looking not to get the seller the absolute maximum price, or to get the buyer the absolute lowest price. We’re always looking for: how can we solve this problem, this puzzle, that benefits both parties?
And you as a seller should also want that. To me, it’s the ethical thing to do. You don’t want to just sell a fiery trash can to someone for $3 million, right? That’s no good. You want the buyer to actually succeed and, ideally, hopefully make a lot more money than you. That’s their goal, right?
So you want to make sure they’re not crippled so they can go and do that. But at the same time, you are still getting rewarded for all that blood, sweat, and tears—all that sweat equity you put into the business over the years, building it up.
All right, so that’s the podcast today. If you like it, make sure to leave a comment down below if you’re on YouTube.
And if you didn’t know we have a podcast, go to empireflippers.com/podcast and you’ll get to see Greg interview a bunch of random entrepreneurs that are all levels of skill. I’ve interviewed private equity people, startup founders, agency owners—you name it. A lot of good stuff over there.
And of course, if you want to help Greg pay for this conference event, come and sell your business with me, or buy a business using some of the buyer tools I just mentioned on this podcast.
All right, with that said, I will talk to you all later and see you on the next one.
There you have it. I hope you enjoyed it. I hope it got you inspired about all the different things that are happening in this industry.
And of course, if you just want to buy a highly profitable business, you can always go to empireflippers.com/marketplace. Or maybe you want to make an exit of your highly profitable business—you can go to empireflippers.com/sell-your-site.
I’ve been your host, Greg. If you enjoyed this episode, make sure you leave a review, give us a like, a follow, share it across social media.
Talk to you all soon. See you on the next episode.
