Price and terms are not the same thing

The short version

• The price is how much. The terms are how and when you pay, and what each side promises.
• Terms can matter as much as price, to you and to the seller.
• A seller may accept a lower price with more cash at closing, or a higher price paid partly over time.
• Your lender's rules limit some terms. Know them before you offer.
• Build your offer around what the business earns and what you can finance, not around the asking price.

What makes up an offer

• Price: the total you will pay.
• Cash at closing: what the seller receives the day the sale closes.
• Seller note: part of the price paid to the seller over time. Lesson 6.4 covers the rules.
• Working capital: how much cash, receivables and inventory stay in the business. Lesson 6.5 covers this.
• What is included: equipment, vehicles, inventory and real estate.
• Structure: buying the assets or the company. Lesson 6.6 covers this.
• The seller's role after closing: how long, doing what and how they are paid.
• The non-compete: how long and how far the seller agrees not to compete.
• Timing: how long you need for due diligence and financing.

Why terms matter to the seller

Sellers care about more than the number. Many care about cash at closing, a clean exit, their team and their name. An offer that respects what matters to them can win at a lower price than one that does not.

Why terms matter to you

• A seller note lowers the cash you need and keeps the seller invested in your success.
• A longer handover lowers your risk.
• A realistic working capital target protects you on day one.
• A strong non-compete protects the customers you are paying for.

Your lender sets some limits

If you use an SBA loan, the rules shape your offer. You must put in at least 10 percent of the total cost of the purchase yourself. A seller note counts toward that only under strict rules. Payments tied to future results, called earnouts, are not allowed. Know these before you make an offer, so you do not promise what your lender will not allow.

Start from what the business supports

Begin with the earnings you rebuilt in Lesson 5.3 and your ceiling from Lesson 3.4. Then use terms to close the gap with the seller, not to stretch past what the business can carry.