They Got Acquired - The pros and cons of seller financing

November 14, 2023
​Read on web​

What is seller financing? And should you consider it when you sell your business?

We’ve covered a number of deals that included seller financing, including Matthew Passy’s sale of The Podcast Consultant, an agency.

He had to get up to speed quickly on the approach when his buyer wanted him to lend back 15% of the purchase price.

“I’d never heard of seller financing,” Passy said. “But the buyer said they were getting an SBA loan and this was how it had to be structured.” (Spoiler alert: he ended up taking the deal.)

This setup is also known as owner financing, taking back paper, seller take-back financing, or seller carry-back financing.

It means the seller directly loans the buyer some of the funds needed to buy their business, eliminating the bank as middleman in the transaction.

The seller then collects repayment in monthly installments, sometimes with interest, until the loan is paid off.

Our story reviews the pros and cons of this approach:

​Should you consider seller financing when you sell your business? We explain how it works​

Sponsored by

Build trust and stand out with case studies

Video — and written — case studies are proven trust-builders for your business.

But they can be time-consuming to create well.

What if you could hire an experienced firm to create them for you?

Why your business needs case studies:

• Prospective customers have hundreds of options to choose from. Case studies offer reasons to hire your company over others.
• Case studies fuel growth, so you can increase revenue.
• Video case studies can be repurposed into assets for sales and marketing, giving you multiple assets in one shot.

Why you should outsource to Audience Ops:

• We give you time back to focus on tasks only you can handle.
• Our team has produced thousands of case studies, so we have a smooth process from start to finish.
• Customers often give a more authentic story when they’re talking to someone outside of your company.
• We lean into efficiency: one kick-off call with you, a 30-minute Zoom with your customer, and asynchronous communication through delivery (usually 3-4 weeks after the call).

Behind the Business (of TGA)

When I asked recently for ideas for this section, a reader responded:

That felt close to home because it's something I often think about, and it requires constant recalibration. In fact, my business coach and I were talking about this during my last session.

For me, choosing what to say "no" to requires first identifying my top goals, so I'm clear on what deserves a resounding "yes."

Then anything that doesn't fall into that "yes" category probably needs to be a "no."

My "yes" list right now has one focus: revenue.

1.5 years into growing this company, our brand is solid, our content machine is humming along (85% runs without me), and we have product-market fit on the media side.

Now our revenue generation needs to play catch up. So the two things I'm personally focusing on for the next few months are our data product (aiming for a beta launch in January) and sponsorships.

I typically have about 25-30 work hours each week. So if I want to move forward on those priorities, I have to say no to other things I want to do.

Here's what's on my "no" list right now:

• Calls with founders who want to sell. I've been doing these for free for the last two years, and I'm putting them on hold for a few months to free up that time.
• Webinars. I did a big push on webinars this fall to grow our audience, and now I need a break to focus on new priorities.
• Calls just to "connect." I get a lot of requests like this, and it might make sense when I'm in a networking phase, but not for my heads-down execution phase.
• SEO sprint. Our site has so much SEO potential, so I'm itching to do a push, but it will just have to wait.
• TGA community. We experimented with this and I'd love to keep it going, but it doesn't meet the criteria above, so it got cut.
• Outside groups. I recently left a mastermind group that wasn't giving me enough value, to get back that time.
• Little things that aren't perfectly optimized. Sometimes I force myself to look the other way, following Tim Ferris' advice to let small bad things happen, so I can focus on the big things.

Here are two things that help me whenever I have trouble saying "no"...

👉 Nothing is permanent.

Saying "no" now doesn't mean saying no forever. Everything is an experiment. If this approach doesn't work, I can change my mind and do things differently.

👉 Saying "yes" to a non-priority effectively means saying "no" to my priorities for those hours.

Looking at choices through that lens makes it easier to stay on target.

See you next time,

Lexi Grant
Founder & CEO
​They Got Acquired​

​

​

​

P.S. Speaking of saying "no," we're not publishing newsletters starting this Friday through the Thanksgiving holiday.

I hope the week is good to you! See you again Nov. 28.​