07 Oct Total Seller Consideration
Some of you may already be doing this, but I have started adding a standard extra page to the “Seller Carry” version of a valuation. This is only for the purpose of “selling” the idea of Seller Carry to my Client Prospect.
Below you will find an example for a large company I am about to list (I hope).
There are two objectives:
1. To show them how much more they will receive from the sale if they carry a note. Notice that these sellers would earn another $59,188 in interest
2. To get them used to the idea that our commission is coming out of the cash at closing. Note that, after interest, they would receive 96.3% of the purchase price.
I do not make an attempt to compute the savings in taxes from the installment note vs. a lump-sum at closing.
Company Name, Inc.
Assuming 50% Cash, 50% Seller Carry
Summary of Total Consideration Received By Seller
Assumes that Buyer does not purchase accounts receiveable
| Dollar Amount | Totals | Percent | |
| Selling Price | $740,000 | 100% | |
| Recieved in Cash at Closing: | |||
| Purchase Price | $370,000 | 50.0% | |
| Lease Deposit | 3,000 | 0.4% | |
| Less: Broker Commission | (88,800) | -12.0% | |
| Less: Seller’s 50% of Closing Costs | (900) | $283,300 | -0.1% |
| Total Received at Closing | $283,300 | $283,300 | 38.3% |
| ————- | |||
| Received on the Note: | |||
| Principal | $370,000 | 50.0% | |
| Interest (60 Monthly Payments of $7,153) | 59,188 | 8.0% | |
| Total Received on the Note | $429,188 | 429,188 | 58.0% |
| ————– | |||
| Total Consideration Received By Seller | $712,488 | 96.3% |
