Hey everybody, Robert Hirsch from Freedom Factory here, and I want to answer a question that we get a lot, which is, how do I pay for a business. Now after doing this almost exclusively for 20 years, all you do is see these deals go through. And what looks normal to me is really different to a lot of my fellow entrepreneurs.

And so I was with a group of entrepreneurs speaking to them last night. And what they told me is they said, Robert, I don't have 2 million sitting around to buy a business, you know, maybe a private equity guys or venture capital guys, or more successful entrepreneurs. But that's not me. And I thought about it and I gave a little bit of a chuckle and I realized that they're probably not the only entrepreneurs that think this. And so I wanted to talk about different ways to pay for a business. So there's a couple ones that are pretty interesting. You can do it either through equity or through debt. Right?

So let's start with equity. So equity, you can put together an investor round to acquire a company. You can secure it by the business. For me, I do better with just a few investors, not a lot of little ones - the friends and family. And that can be nice for smaller things.

So there are different types of debt. My favorite kind of debt when I'm buying a business is seller financing. So if the seller is selling a great business, and you've probably seen some videos of mine talking about the difference between you'd rather buy a great business at a good price and a good business at a great price. So if you're selling a great business and the seller is confident in their business, they'll be happy to take a note on it.

Sometimes it's as little as 10 or 20% when you're trying to bridge the gap. Sometimes it's as much as 90%. I've seen 90% solid carry just secured by the business, and if you're not successful, the business goes right back to them and they like their business. So they're happy to do that.

There's also bankers, but it's so funny, the old Axiom about bankers wanting to lend you money, when you don't need it, and don't lend you money when you need it. In my experience, that's been true. If you've got a successful business, the lending of money on it, but they're going to want you to collateralize it with your other business in most circumstances.

And if you can buy that for $200,000 you look at stock valuations and things along those lines, but when you're buying a business at three X and you're putting 10% down, as an entrepreneur, I can't think of a better deal than that. An SBA loans had their own restrictions. You have to put a personal guarantee on it. I think they cap it at $5 million currently. 

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