Finance

Have finance questions? Ask a financial expert online.

Ask an Expert,
Get an Answer ASAP!

I am selling my business. Should I try all cash deal if it…

Customer Question
I am selling my business...
I am selling my business. Should I try for an all cash deal if it is 20 percent lower than holding paper for 7 years
Submitted: 2 years ago.Category: Finance
Show More
Show Less
Ask Your Own Finance Question
Answered in 11 minutes by:
1/19/2016
Financial Professional: PDtax, CPA, MBA replied 2 years ago
PDtax
PDtax, CPA, MBA
Category: Finance
Satisfied Customers: 5,123
Experience: Tax professional and business consultant for 35 years.
Verified

Hi from Just Answer. I'm PDtax. I'll assist.

Ask Your Own Finance Question
Financial Professional: PDtax, CPA, MBA replied 2 years ago

The best deal you can make is all cash. It means you have to pay the tax pretty quickly, but you avoid so many risks by doing so. The 'discount' is not how to think of the sale, but instead the premium you ask for by taking payments over time.

Let's say you want to sell for $100,000 cash, or you will receive $17,000 a year for 7 years. I would take $100,000 up front, no questions asked.

Let's say you can invest the $100,000 for 4%. If you don't have to touch the money, other than pay the tax, you will earn the 20% difference and have no risk. If the business fails, if the buyer gets ill, if a competitor enters the market and steals clients or market share, you are not affected.

The 20% price adjustment works out to less than 5 years at 4%. That simple math, added to the elimination of so many risks to you actually receiving your sale price, is overwhelming to me. Take the money up front if at all possible.

I can think of a number of deals that fell apart years later, sometimes for risks that weren't either party's fault. The last thing you should want is the legal cost of suing to get your payments from an injured or failing business.

Thanks for asking at Just Answer. Positive feedback is appreciated. I'm PDtax.

Ask Your Own Finance Question
Customer reply replied 2 years ago
Great. I will be calling back to discuss in detail. An attorney broker friend puts the rate of non payment paper deals on small biz at 90 percent here in nj. My buyers are now trying for 290 up front and two six month balloons of 30 k. I wanted 340 which is reduction from 433 cash asked This is 3 times owner benefit and I can easily pull this amount out in 36 months if I continue to run it. 67 year old vet with pretty good health but tired of 100 hour weeks in 24 7 emergency repair ins co construction
Financial Professional: PDtax, CPA, MBA replied 2 years ago

290K up front and 2 short term 30K payments is not bad. You could set up personal guarantees or otherwise limit the risk of the remainder, such as making the buyers pay for your collection costs, including legal. I might even consider a confession of judgment for the $60K, sign by both buyers. That would eliminate the need to go to court to litigate, and give you the tool to pursue your $$ if there are issues, which doesn't seem likely, since the cash is available from your buyers and the business is profitable.

You didn't ask my opinion, but accepting the deal your buyers propose (with a minor tweak they should go for) seems like a deal you could consider.

Thanks again. Don't forget to rate my assistance when we are done. I'm PDtax.

Ask Your Own Finance Question
Financial Professional: PDtax, CPA, MBA replied 2 years ago

Can I ask that you accept my work to close out this question?

I will be glad to assist further if needed, but need to close this question out. Please rate my assistance to close out this question thread.

PDtax

Ask Your Own Finance Question
Was this answer helpful?

How JustAnswer works

step-image
Describe your issueThe assistant will guide you
step-image
Chat 1:1 with a financial professionalLicensed Experts are available 24/7
step-image
100% satisfaction guaranteeGet all the answers you need
Ask PDtax Your Own Question
PDtax
PDtax
PDtax, CPA, MBA
Category: Finance
Satisfied Customers: 5,123
5,123 Satisfied Customers
Experience: Tax professional and business consultant for 35 years.

PDtax is online now

A new question is answered every 9 seconds

How JustAnswer works:

  • Ask an ExpertExperts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional AnswerVia email, text message, or notification as you wait on our site. Ask follow up questions if you need to.
  • 100% Satisfaction GuaranteeRate the answer you receive.

JustAnswer in the News:

Ask-a-doc Web sites: If you've got a quick question, you can try to get an answer from sites that say they have various specialists on hand to give quick answers... Justanswer.com.
JustAnswer.com...has seen a spike since October in legal questions from readers about layoffs, unemployment and severance.
Web sites like justanswer.com/legal
...leave nothing to chance.
Traffic on JustAnswer rose 14 percent...and had nearly 400,000 page views in 30 days...inquiries related to stress, high blood pressure, drinking and heart pain jumped 33 percent.
Tory Johnson, GMA Workplace Contributor, discusses work-from-home jobs, such as JustAnswer in which verified Experts answer people’s questions.
I will tell you that...the things you have to go through to be an Expert are quite rigorous.

What Customers are Saying:

I really was impressed with the prompt response. Your expert was not only a tax expert, but a people expert!!! Her genuine and caring attitude came across in her response...

T.G.WMatteson, IL

I WON!!! I just wanted you to know that your original answer gave me the courage and confidence to go into yesterday's audit ready to fight.

BonnieChesnee, SC

Great service. Answered my complex tax question in detail and provided a lot of additional useful information for my specific situation.

JohnMinneapolis, MN

Excellent information, very quick reply. The experts really take the time to address your questions, it is well worth the fee, for the peace of mind they can provide you with.

OrvilleHesperia, California

Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help.

Mary C.Freshfield, Liverpool, UK

This expert is wonderful. They truly know what they are talking about, and they actually care about you. They really helped put my nerves at ease. Thank you so much!!!!

AlexLos Angeles, CA

Thank you for all your help. It is nice to know that this service is here for people like myself, who need answers fast and are not sure who to consult.

GPHesperia, CA

< Previous | Next >

Meet the Experts:

Rakhi Vasavada

Rakhi Vasavada

Financial and Legal Consultant

2,609 satisfied customers

Graduated in law with Emphasis on Finance and have have been working in financial sector for over 12 Years

Megan C

Megan C

Certified Public Accountant (CPA)

2,222 satisfied customers

Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level

Manal Elkhoshkhany

Manal Elkhoshkhany

Tutor

1,933 satisfied customers

More than 5000 online tutoring sessions.

JKCPA

JKCPA

CPA

844 satisfied customers

Bachelors degree and CPA with Accounting experience.

Eric

Eric

Financial Manager

559 satisfied customers

Loan servicing, counseling and real estate expert. Foreclosure Expert and Financial Planner.

R. Klein, EA

R. Klein, EA

Accountant

480 satisfied customers

TurboTax Expert. QuickBooks Certified Pro Advisor

Dimitry K., Esq.

Dimitry K., Esq.

Attorney

332 satisfied customers

NASD Licensed Rep, 1997-2001, Business Attorney

< Previous | Next >

Related Finance Questions
Curious as to holding on to a depleted 401k balance. Saw the
Curious as to holding on to a depleted 401k balance. Saw the drop coming on t.a., but let everything ride, and have lost about 50% of 116k. I have 22 holdings, all with what I considered to have long … read more
PDtax
PDtax
CPA, MBA
Master's Degree
5,123 satisfied customers
Midland Chemical Co. is negotiating a loan from Manhattan Bank
Midland Chemical Co. is negotiating a loan from Manhattan Bank and Trust. The small chemical company needs to borrow $500,000. The bank offers a rate of 8¼ percent with a 20 percent compensating balan… read more
Neo
Neo
Bachelor\u0027s Degree
1,144 satisfied customers
Can you summarize how the tax bill affects S Corporations
Can you summarize how the tax bill affects S Corporations and if there is anything we need to do, or consider doing before year end due to the new bill?… read more
taxmanrog
taxmanrog
Master\u0027s Degree
1,062 satisfied customers
Is their a tax benefit in selling a business on a 2 year plan
Is their a tax benefit in selling a business on a 2 year plan vs a 1 year plan? What is federal tax rate on a asset sale of a business for 1,450,000?… read more
Jason M. Tyra, CPA
Jason M. Tyra, CPA
Principal
Master\u0027s Degree
167 satisfied customers
The fed reserve plans to start raising interest rates sometime
The fed reserve plans to start raising interest rates sometime this year although no date has been set. I own closed end funds ncz, 2850 shares, and ncv 850 shares. ncz's holding are corporate convert… read more
keeperumiami
keeperumiami
Sr Financial & Tax Consultant
Bachelor\u0027s Degree
1 satisfied customers
I am buying an office condo for my business. Should I pay cash for it and pay myself the a
I am buying an office condo for my business. Should I pay cash for it and pay myself the amount of interest the bank is offering on a commercial real-estate loan or should I finance the building ? I h… read more
DanielleCPA
DanielleCPA
Certified Public Accountant
Bachelor's Degree
76 satisfied customers
We own several child care centers and along with the operations
We own several child care centers and along with the operations we own many of the buildings. We have had an investor contact us about buying the buildings from us and then we would lease them from th… read more
Charles Greiner
Charles Greiner
Owner
Bachelor's Degree
2,436 satisfied customers
have car loan, equity loan, and mortgage loan. Should I consolidate
have car loan, equity loan, and mortgage loan. Should I consolidate and refi my mortgage with being so low? I have a 4 5/8 on 30 years already and have been paying 7 years already. I have plenty of eq… read more
TaxTom
TaxTom
Accountant
Bachelor's Degree
14 satisfied customers
the Comprehensive Problem Midland Chemical Co. on pp. 250
the Comprehensive Problem: Midland Chemical Co. on pp. 250 & 251 of Foundations of Financial Management. Midland Chemical Co. is negotiating a loan from Manhattan Bank and Trust. The small chemical co… read more
Neo
Neo
Bachelor\u0027s Degree
1,144 satisfied customers
1. The primary goal of a publicly-owned firm interested in
1. The primary goal of a publicly-owned firm interested in serving its stockholders should be to (Points: 1) a. Maximize expected total corporate profit. b. Maximize expected EPS. c. Minimize the chan… read more
Manal Elkhoshkhany
Manal Elkhoshkhany
Tutor
1,933 satisfied customers
1. Maximization of shareholders wealth is a concept in which a. Profits
1. Maximization of shareholders wealth is a concept in which a. Profits are maximizes on a quaterly basis b. Optimally increasing the long-term value of the firm is emphasized c. Virtually all earning… read more
Manal Elkhoshkhany
Manal Elkhoshkhany
Tutor
1,933 satisfied customers
Midland Chemical Co. is negotiating a loan from Manhattan Bank
Midland Chemical Co. is negotiating a loan from Manhattan Bank and Trust. The small chemical company needs to borrow $500,000. The bank offers a rate of 8¼ percent with a 20 percent compensating balan… read more
Manal Elkhoshkhany
Manal Elkhoshkhany
Tutor
1,933 satisfied customers
I am not a US citizen nor do I have a green card. I am interested
I am not a US citizen nor do I have a green card. I am interested to buy property (a house in Arizona) for investment . I intend to look for a US 300,000 house and try to buy it as low as possible (pe… read more
Milan Vaishnav
Milan Vaishnav
Consulting Technical Analyst
Bachelor's Degree
536 satisfied customers
1. Determine the value of a $1,000 denomination Bell South
1. Determine the value of a $1,000 denomination Bell South bond with a 7 percent coupon rate maturing in 20 years for an investor whose required rate return is: A. 8 percent B. 7 percent C. 5 percent … read more
Manal Elkhoshkhany
Manal Elkhoshkhany
Tutor
1,933 satisfied customers
Should I stop contributing to my stock mutual funds and and
Should I stop contributing to my stock mutual funds and and have all my money doposited in a cash reserve fund that is actually making money at this point.I am not going to sell what I have in these f… read more
Bill
Bill
Master's Degree
2,278 satisfied customers
INVESTMENT IN OPTIONS How can i verify that the ...
INVESTMENT IN OPTIONS: How can i verify that the information that i get on the net is the TRUTH? I have found an investment opportunity wich i want to try but dont know if the website is a scam or "th… read more
Ed Johnson
Ed Johnson
Senior HR Consultant and Business Devlpm
Bachelor's Degree
6,994 satisfied customers
I just want to determine the value of our company and to do ...
I just want to determine the value of our company and to do that I would like to know which discount rate I have to apply to the Cash flow. Our company is a PYME that just have 2 years in the market w… read more
The Geezer
The Geezer
Master's Degree
120 satisfied customers
I am selling a Bed and Breakfast. The real estate was ...
I am selling a Bed and Breakfast. The real estate was purchased for 374,999 and the business for $1. During the first two years of ownership, I made capital improvements equating to approximately $500… read more
Dennis M. Smith
Dennis M. Smith
Retired
Bachelor Degree
1,293 satisfied customers
Disclaimer: Information in questions, answers, and other posts on this site ("Posts") comes from individual users, not JustAnswer; JustAnswer is not responsible for Posts. Posts are for general information, are not intended to substitute for informed professional advice (medical, legal, veterinary, financial, etc.), or to establish a professional-client relationship. The site and services are provided "as is" with no warranty or representations by JustAnswer regarding the qualifications of Experts. To see what credentials have been verified by a third-party service, please click on the "Verified" symbol in some Experts' profiles. JustAnswer is not intended or designed for EMERGENCY questions which should be directed immediately by telephone or in-person to qualified professionals.

Disclaimer: Information in questions, answers, and other posts on this site ("Posts") comes from individual users, not JustAnswer; JustAnswer is not responsible for Posts. Posts are for general information, are not intended to substitute for informed professional advice (medical, legal, veterinary, financial, etc.), or to establish a professional-client relationship. The site and services are provided "as is" with no warranty or representations by JustAnswer regarding the qualifications of Experts. To see what credentials have been verified by a third-party service, please click on the "Verified" symbol in some Experts' profiles. JustAnswer is not intended or designed for EMERGENCY questions which should be directed immediately by telephone or in-person to qualified professionals.

Show MoreShow Less

Ask Your Question

x