2. Negotiate a ‘bullet’ payment for half of the lend at the end of 5 years. This means half of the lend is interest only and is refinanced in 5 years' time. With this in mind, the debt service could come down with deferred at £180K per year and bank debt service at £200K per year for a total of £380K. This is well below the £450K available so the deal now cash flows! Just a quick caveat: this is a somewhat simplistic example for demonstration purposes. There can be many nuances such as the amount of money you need to take out of the business for your own expenses. But the idea is to provide some kind of framework for how this works. We would work with you in the detail on each individual situation as they are all unique with different risk profiles (i.e. with a very solid business with low risk you may be more comfortable with more debt, the opposite may be true with a higher risk business). Presenting the Offer to the Seller This is an important moment as if it is done correctly the Seller will be on board and the deal will proceed. Done incorrectly and the Seller may feel terrified, confused, insulted, angry or any combination and the deal will not proceed. Our standard policy for presenting offers is as follows: 1. An offer is never sent in writing before the presentation. The Seller will never understand it unless they have M&A experience (just the terminology let alone all the mechanisms) and it will take longer to undo misinterpretations if we even get a chance. 2. We never let Buyers and Sellers talk about money. Transactions close because of trust and we have learned that conversations about money most often erode trust. We at Transworld M&A have a process,
79
Made with FlippingBook - professional solution for displaying marketing and sales documents online