It’s a fact that 70% of businesses sold have some form of seller financing. Most sellers want a full cash payment which is understandable. There’s absolutely nothing wrong with selling a business and asking all cash. The problem with asking all cash is that you’re competing with businesses offer seller financing so yours will be the last one given serious consideration.
Most, if not all lenders will only finance 50-80% of an insurance agency purchase. There are the rare exceptions however as a rule of thumb sellers should expect offers with some form of seller financing involved.
Buyers want to leverage their purchase and have the agency pay for itself once they purchase it. By offering seller financing you also get to tax breaks because you pay taxes on the money as you receive it. If it’s spread over 2 years, your taxes will be too.
Keep in mind when providing seller financing you can protect yourself by collateralizing the agency. Basically you have a lien against the insurance agency until your note is paid in full. There are state filings that protect you so your collateral can’t be liened by any party until you release yours.
We’re not saying that in order to sell your insurance agency you have to offer seller financing. What we are saying is you have a much better chance of selling and will fetch top dollar by doing so.