FP - Creative (?) negotiations

[BrettM]

I guess this could be a buyer's or seller's tip....

Negotiating a buy recently, I tried out a negotiation tip I can't take credit for. Partly comes from reading about real estate investing a few years ago, as well as a podcast I listened to recently.

Deal was the site was an 'active' business (e.g., not a passive, sit-back-and-do-nothing site) providing services.

My concern was maintaing the business after transition, as obviously current owners have a lot of knowledge that could smooth out the transition.

With that in mind, I asked if they were interested in continuing on a few months in exchange for percentage of profits. They hang around, then make extra money.

What they came back with (completely unprompted by me, but where I was heading) was an offer to place approximately 60% down, and pay off the remaining 40% over a few months via the profits of the business.

(Actually it was more then 40%, as the total cost via this 'vendor financing' would be more then buying it outright -- I pay more in the end, but get their expertise during the transition.)

Not a bad deal, and certainly just one more thing to consider (for both buyers and sellers).

Anybody ever do a deal with this, and any pros and cons?

[Bryan]

Actually deals like this (seller financing) are not a very rare occurrence when it comes to $100k+ sites.

I recently saw a pretty good article on this subject from QLB (our competitors ) - take a look:

http://www.quietlightbrokerage.com/r...ing/financing/

[Ryan Sorensen]

I have had buyers offer to purchase sites based on a creative financing agreement. For example a recent site that I was asking $10K for a buyer offered a total of $7K, with only $4K upfront and the rest over the next 3 months based on performance.

Another person offered $10K with the agreement that I would be responsible for making changes to the site's design along with a few other things. I knew I could get this work done in a short amount of time and within a reasonable cost.

Even though the second offer still wasn't as clean as I'd like a website transaction to be, I went with it. One, because I knew I would get paid and be able to move on quickly, two because the transaction was simple and I'd be guaranteed to get paid now versus waiting 3 months with a potential default.

It turns out (after over 2 long weeks) that the process of hiring outsourcers under a time crunch added a huge amount of stress and was ultimately unnecessary. I could have offered the site for $9K, which the buyer would have gladly accepted, and moved on.

Ultimately as website buyers and sellers we want to keep the cash flowing and keep transactions simple and clear. Even if a creative deal is the best offer on the table, I feel that keeping the site for a few more months while letting it build more history is still a better option in the long run.