Lending Boosts Valuation
With lending and financing, you can boost valuation.
An SBA loan or an alternative type loan can allow for a bigger sale, where you still get the money upfront.
The pool of people who can afford $200k down as opposed to $1mm cash is a lot larger.
Therefore, this drives the price up.
The way to get lending is to usually have 2+ years of qualified tax returns.
The way to get approved for a higher valuation is a higher net.
Lenders will look at add-backs, but generally the net you declare is what will dictate.
So there are pro’s and con’s to everything in the tax return.
You benefit initially from deducting more and declaring less net income, because you have less tax liability, but you benefit more on the sale if you declare more.
Lending boosts valuation anywhere from 10%-25% on a smaller deal, 20%-35% on a mid market size deal, and virtually makes any deal above $20mm in play, whereas without financing, the larger deals are virtually impossible to architect, unless you are deep in with a conglomerate sitting on a lot of cash.
The pool of buyers is much, much larger when financing is available.
Closing on a cash deal is usually from 14 to 30 days due diligence.
With a lender, it is usually prolonged to 30-60 days and up to 90 days.
At JARBLY, we have lenders who can get deals done, that otherwise would be much harder to sell without offering financing.
Please reach out to us if you have any questions relating to acquisitions:
Email – acquisitions@jarbly.com
Phone – (800) 773-1523
Simply engage us below to get started whether it comes to bringing you qualified buyers where we list your business for maximal value or engaging us to bring qualified and vetted businesses that match your exact target criteria such as industry and EBITDA multiple if you are buying a business:
Buyer-Side Engagement – Retain Us to Provide you with Qualified and Vetted Businesses that Match Your Target Criteria
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