Selling: Lump Sum vs. Payments?

I own a site that nets $5900/mo (avg. over the past 46 months) and moves $500k in product/yr.

I'm in negotiations re: a partnership that would buy me out.

In the current economic climate, are $100k+ site sales more commonly done by lump sum or payments?

 

Lump sum. They would have to probably take out a business loan. No point in getting payments when you could just keep the company and receive payments now would it?

 

The payments would be in addition to monthly commissions, until the deal was paid off. Only then would I turn over the keys.

 

No, because that doesn't sound right. When you buy a business (let's say you're an entrepreneur), you want it now. There is no way someone would pay you each month until they covered the full cost of what you're selling the business for.

 

It really depends on the source of financing.

Lump sum is common for large transactions, however, depending on the funding source, they may require your continued involvement to provide the funding.

This is also common.

Find if their funding source is going to require you to still be involved in the project (how is your partner going to handle the tasks that you originally performed?) If you are required to still be involved don't forget to add a management fee for the arrangement.

 

To be honest,$100k for the site that earn $5.9k/month is good ratio.
The question is whether the site able to sustain the earning for next 48 month.

 

"I'm in negotiations re: a partnership that would buy me out."

I said it's a PARTNERSHIP. I'll be working with the buyer.

 

You got it.

We'll become the marketing and affiliate development division of the company. Our success as their #1 affiliate is the reason they want to buy us out... security for them.

 

So, you're selling 1/2 your company and bringing on a partner? Am I understanding this correctly?

 

now days i think they are done lump sum

 

We're becoming partners with the merchant after many years as their top affiliate. No more merchant/affiliate conflicts of interest.

 

Just curious, why would a company buy you out for a partnership?

 

Because we've achieved as an affiliate what they have not been able to achieve as a merchant.

 

Yes lump sum is the way to go. Also be thinking of how much input you are wanting to have on the operations day to day.

This could become a conflict down the road, it doesn't matter what you both decide, it just needs to be addressed and clarified as part of the transaction.

A clear definition of what you bring to the table and what they bring to the table.

It doesn't have to fancy or in legal-eeze just a clarification of thoughts, organization and responsibilities.