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
|Recieved in Cash at Closing:|
|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:|
|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%|