All Cash Business Buyers
If you are selling a business, your dream buyer will be paying cash. Although paying cash for a business is rare, there actually are buyers who are willing and able to do so. These buyers come up with the cash in a variety of ways, and they usually have from $10,000 up to the millions to invest in a business.
It is more common for existing corporations to pay cash for a business than it is for individuals, however, individuals can also come up with cash to buy a business outright. They use retirement funds, inheritances, savings, money borrowed from friends and relatives, and in some cases, they line up investors in advance.
Many business owners believe that finding cash paying buyers is difficult, but it is actually easier than you might think. Business brokers are a good source for finding buyers who will pay cash for your business. Of course, approaching corporations that are related in some way to your business is also a good way to find cash buyers. However, you should note that most brokers consider businesses where the owner requires the buyer to pay cash are actually harder to sell.
It is also important to note that surveys have shown that a seller who requires all cash only receives about 70% of their asking price, while sellers who accept financing terms generally receive about 86% of their asking price. Many buyers who are able to pay cash are more attracted to businesses where the seller is offering terms because it makes them feel that the seller has enough confidence that the business can pay for itself, whereas, if he is requiring cash, the seller may be doing so because he doesn't feel that the business can pay for itself.
Likewise, some sellers are uneasy with buyers who insist on paying cash. They often wonder if the cash was obtained legally. If you have concerns about a cash buyer, simply find a way to ask them how they managed to raise the cash, in a conversational manner.
If you find a buyer for your business, and that buyer pays you in cash, make sure that you report it to the IRS. Failure to do so can result in fines, as well as a prison sentence. You should also note that anytime a deposit of $10,000 or more is made into your account, your bank is required by law to report the deposit to the US Treasury. Accepting cash for a business is perfectly legal, as long as you report the money on your taxes and make sure everything is on the up and up.
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