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Silly question?

Say a business is for sale with an asking price of $6M us. Gross income is $25M & cash flow is $15M. Would anybody ever agree to sell a company to someone on the basis that out of the $15M income per year it generates, the new owner paid $10M a year over 3 years? Does this ever actually happen or is it just a completely ridiculous idea? Just curious. Thank you

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Answers (4)
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IAGD int3D
IA-Design Business Development
TX

I wouldn't sell the biz.
If it does generates that much of CASH flow...

Its weird isn't it...

Dec 3, 2009
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I think you maybe referring to an earnout. In that case, it is a possibility.

Nov 30, 2009
Julie A. Barnes, CPA
Small Business Exchange, Inc.
Travis County, TX

Hi Jessy,

Are you trying to say that the owner paid him or herself $10M a year over a 3-year period? You've definitely piqued my curiosity!

Thanks
Julie A. Barnes
President, SBX, Inc.
http://www.AustinBusinessesForSaleBlog.com

Nov 29, 2009
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The BAF Group LLC
MD

I think there is something very wierd about this, but I am not certain I understood your premise, particularly the sentence that read: "Would anybody ever agree to sell a company to someone on the basis that out of the $15M income per year it generates, the new owner paid $10M a year over 3 years?"

Nov 29, 2009