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Is it possible to acquire a good cash flowing business without any money down? A lease to own arrangement?

I was wondering whether any business owners who are not having success selling in today's market would consider taking on a protégé to learn the business, work the business, continue to pay the owner a negotiated share of the profits and any additional amounts would be used to pay down the sales price so that the protégé will ultimately own the business after the sales price is paid in full.

I realize this is a bit unorthodox, but there are some smart, trustworthy, hardworking individuals looking to take on new ventures, who may not be currently liquid to make an outright purchase.

All constructive thoughts are appreciated.

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Answers (4)
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Corporate Financiers

Depends on the seller's personal circumstances, but seller notes coupled with a seller staying onboard through the transition period is more common in this marketplace. Keep in mind, seller notes seem to often result in the seller being less willing to negotiate purchase price. Secondly, despite there being seller's equity, a traditional lender will not view this is actual equity - hence would likely need more of a hard money lender which results in higher fees/interest.

As a prior Banker at Merrill Lynch, in addition addition to, an Accountancy background from the U. of Michigan and Northwestern I can help you buy this business or arrange the financing. There is no cost to the borrower for me arranging their financing. No obligation and I can provide references. Todd 312-488-3505

Aug 18, 2010
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The BAF Group LLC

The key to your question is, "a good cash flowing business". We have had this question several times, before. The answer is always the same: There is absolutely nothing for a Seller to gain, and much to lose by doing things in this way. As a Broker, I would never, ever counsel a Seller to take such a deal.

Yes, there are plenty of smart, trustworthy people in the market. How do you quantify that? How do you guarantee that? Would you give up something that you worked for, invested in, starved for in come cases, and turn it over to a complete stranger, who tells you he is smart and honest? Would you give up your livelihood for such a move?

The only time I have ever seen anything like this is with an Owner who sells to one of his/her key employees. Then, it is turned over to someone he/she has known for a number of years, knows the employees record of integrity and know-how. Only then does it make any sense, at all.

Is it possible? I would never say never. But as a Business Broker, if the business has a "good cash flow", I would never, every counsel a Seller to take such a deal. There are too many alternatives to get him/her a relatively risk-free deal. If the Owner took a lot of risk, put in a lot of money, time, sweat and sometimes blood to start or buy the Business, why would he/she do the same, in order to sell it, if there were viable options. And if it has "good cash flow", there are always options!

I know that is not what you want to hear, but I don't want you to go around chasing windmills, either. Borrow from friends, family - do whatever you can to put the funds together on your own. But getting it from the Seller in this way is next to impossible - and should be.

Aug 18, 2010
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Biz2Credit LLC
New York County, NY


Biz2Credit ( helps in large no. of business acqusition deals. Normally banks want atleast 10% downpayment to be amde by the buyer and rest can come as a seller note. Register for free on and chsoe the case manager option to get started.

Aug 18, 2010
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The BAF Group LLC

I would never say never. However, on balance, there is no reason in the World for a Seller, with a Business that has good Cash Flow, to consider a "lease to own" situation. And again, if the Business has good Cash Flow, there is no reason for a Seller to take anything like a "nothing down" offer.

Absolutely, it is in the Buyer's best interests for one of these scenarios to be played out. But you have to put yourself in the Seller's shoes: Why would you do tha, as a Sellert? What possible benefit is there to you, the Seller? If your business has good Cash Flow, why would he not wait for a more financially qualified Buyer, and get more security for surrendering his Business?

There are plenty of trustworth Buyers, who are smart, etc. But how do you measure that, if you are the Seller? Why take the risk, if there are other alternatives?

The only time I have ever seen this happen, is when a key employee buys the Business from a Seller who has known him/her for a long time. Again, I am not saying it cannot happen; but I think you would have a better chance in just buying Lotto tickets and waiting for a big payout!

A key to this concept is that the Seller took all the risk in starting or buying his Business; why should he take equal or greater risk in selling it?

Aug 18, 2010