Website Business For Sale

17/10/2011 15:51

With the state of the world economy in a seemingly endless free fall, the climate in the business for sale market place has cooled along with many other industries. There is a lot more caution and fear in the market, with buyers selecting only the most resilient of opportunities that have been able to weather the financial tsunami.Consequently, there are many more sellers emerging from this morass, listing their businesses and hoping to find a buyer to cash them out so they can consolidate and protect their wealth during these uncertain times. If you are interested, check out Website Business For Sale.On the other hand, there are fewer buyers with the available capital to consummate a deal with the sellers. To make matters worse, the tight credit markets have all but assured that available credit previously easy to attain, has all but dried up. In fact, the SBA arm of the government that guarantees small business loans through the banks has recently curtailed their criteria that literally handcuffs most qualified buyers from acquiring financing.In essence, they have determined that a business's goodwill can only represent up to 50% of the value of the total business appraisal or a maximum of $250,000. The balance needing to come from tangible assets such as real estate, equipment, computers, inventory etc. This means the virtual tanking of any hope for website business buyers wanting to finance internet businesses because the majority the valuation is going to be goodwill based off cash flows rather than the virtual or intangible asset of the website itself!This has now created a major trend towards seller financing in order to successfully close a deal. There are several advantages to this type of structure. First, the deals close much quicker. SBA loan transactions can drag on for 3 - 4 months before they are fully funded. Seller financed deals can close quickly because they are less formal and the collateral is the website business which will be repossessed if the buyer defaults. In addition, the seller can earn a much better interest rate on the balance than they would in the bank or a CD or treasuries, so they will actually earn more in the long run, especially when the tax implications are considered. Taking monthly payments, as opposed to one large lump sum at close, can defer taxes and potentially reduce the tax bracket and consequent liability over the long haul.The perceived disadvantages are added risk of default, longer payout time frame, and lower cash at close. Risk can be mitigated based upon the strength of the buyer and their credit rating and history of prior entrepreneurial success. Owner financing is only appropriate with the most qualified of candidates and with a reasonable % paid at closing. The typical percentage of owner financing occurring now is 25% -50% with a few rare exceptions of up to 75%.In the end, both parties who want to get a deal done need to make compromises so they can achieve the mutually desired goal of completing the business for sale transaction successfully. For more details, visit Website Business For Sale.