What It Is
Total Seller Financing, or TSF, is where the owner(s) of a company finance the entire purchase of the company. These deals are a specialty of Azureient Corporation, and we have outlined the process here to introduce the concept, show the pros and cons, and how we work under these terms.
How We Do It
Owners approach us to buy their company. We carry out our initial review and due diligence. If acceptable, we make an offer. If not, we decline the acquisition.
In our TSF model, our offer will reflect our conditions and amounts paid over the financing term. The closing is with attorneys and includes the transfer of all assets and the business to Azureient. Sellers can either stay on for an agreed upon time, or move onto the next venture or chapter in their lives/careers.
Pros & Cons
Transaction Life Cycle
- Seller approaches us to sell business
- We carry out due diligence and business analysis
- Azureient makes offer and terms
- Seller collects payments for term of the financing
Our terms are between 5-20 years depending on factors such as the total acquisition price, seller’s willingness, and company potential. We make every attempt to complete financing deals in the shortest time possible. Depending on the company, we can utilize TSF to actually complete a buyout in 5 years or less. Think of it as a delayed lump sum acquisition.
All our offers offer a reversal clause where in the event that we default, your company is returned back to you, less any equity in payments already made. For example, if we acquire your company and only pay ¼ of the value before default, you will receive the remaining ¾ interest free of any encumbrances by Azureient. While we do not default on any acquisitions, it adds that layer of security for the sellers.
In the TSF model, we benefit from more than just taking control of a company. With the TSF, we free up our investment to improve the company and organizational changes. We do not just acquire an organization and let it run on its own. We get involved and down into how to expand business and increase revenue. This works for us and the seller on many levels.
Is Seller Financing Right For You?
Every owner must take into consideration if this is a route they are willing to go. Most sellers want a lump sum buyout, but often that is not always possible or in the best interest of the buyer. In fact, most companies are sold on some sort of seller financing. It is the best way to attract serious buyers and sell your company quickly.
Is Total Seller Financing Right For You?
This is another question you must ask yourself before engaging us under this model. TSF is not for everyone, as we pointed out earlier. Some owners feel like they are just giving away their company, but that is not the case. In fact, think of it as more of a transition of ownership, where the owners give up control, but still benefit from the operations and monetary success of the company.
How We Approach Acquisitions
When we pursue an acquisition, we are making a very strong commitment to the success of your company. If we believe enough in what you have going, we develop a plan of action that will take it even further. If your company fails this test, it may not be a good fit for us. We are in the business of growing companies, not shrinking them.
Our goal is what we can do for your company and what your company can do for its stakeholders; investors, owners, employees, and even the community. We adopt our company culture into each acquisition and improve upon operations. As outsiders looking in on your business, we have the ability to see areas of strength and weakness that sometimes owners and employees may not catch. These are not bad, but rather a different approach in seeing potential that others may not.
Once you have decided that TSF is for you, contact us with information on your company. Initial contact should include the following items:
- Your name/company name
- Ownership structure (who owns what)
- A statement as to why you are looking to sell
The statement can be long or brief, but we ask that it be concise. Tell us your story, what brought you here, and why you are looking to exit. There is no right or wrong answer. Owners have their own reasons for departing and we have seen some range from retirement to loss of interest. Honesty is always better and enables us to help you more.
Our initial review uses the information you provided above to determine if we should look further.
Our Due Diligence
We will carry out our own due diligence. Our confidentiality is kept with your business alone, as we are not looking to steal ideas, but build upon those already existing. Because we look at several companies each year, we cannot sign any NDA that prohibits us from engaging in a similar business.
During this process, we look at financials, existing operations, and communicate with the seller on any items we need to complete the process. At the end, we create a report on our findings and reason(s) to pursue or not pursue an acquisition. If we decline to proceed, we will let you know why. Most times, we decline acquisitions if it doesn’t fit into our company culture or model or asking price is too high for the numbers to work.
If we do proceed, then we will submit an offer and terms to be reviewed by the owners and their attorney.
Offer & Terms
Our offers will outline the offer price, terms of repayment, terms of ownership transfer, and clauses for default. Once the owners sign and approve the deal, we move into closing.
Closing takes place in person or remotely. In either case, our attorney handles the transfer of ownership and disbursement of payments to the applicable parties. No fees, less hassle, and paperwork can be signed with your attorney or under their advice. We may also arrange closings in person where applicable, but it is not mandatory.