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Thinking of Selling my billing company - am I being offered proper security?

Provided by:  Jennifer Kirschenbaum, Esq.

October 19, 2017

 

Question:


Jennifer,

I got an offer for my billing company; buyer offered 2 months gross revenue on closing and then a payout over 3 years secured by a right to my business back on default. 

Thoughts? I'm nervous this is a bad offer. 

Thanks in advance, 
S

Answer:

Well, without more information on the size, value (strength of client contracts, etc.) and profitability of your company, or your personal circumstances on whether you need an exist fast, I will say this seems to be a below-average industry offer.  I typically see much more paid on closing, a Note for the remainder with a personal guaranty and some additional security offered (of course I prefer real security with equity).  If you are not in a rush you may want to go back and renegotiate, or walk.   

The reversion right does not offer much consolation in my mind, because what good will that do if: (i) you have no interest in stepping back in to operate; and (ii) your business is destroyed from poor management and attrition post-closing.  

Happy to discuss specifics offline.  
    


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