By far, the vast majority of website purchases are performed via some form of Bank Financing. And very few banks will fund a website acquisition without backing from the Small Business Association (SBA). So, there are various policies that SBA lenders must follow in order to receive backing. And of course, banks also have their own underwriting rules. Most banks will require that the seller of a business underwrite a portion of the sale, so it usually must be a part of the transaction.
As a Seller of Middle Market tech company, when preparing an exit strategy, it is best to plan on a portion of the sale of your business to come over time, in the form of a promissory note or earn out. It’s important to note that promissory notes between the Buyer and the Seller must take a second security position to any debt financing that might be set forth in a deal, and usually the lender or investor that issues such debt service will prohibit payments on secondary notes for a period of time after the sale. Based on th...
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