How do you deal with an owner that asks you to put money upfront in a bank account?

Member resources:

Frequent asked questions:

What is Searchfunder.com?

Searchfunder.com is an online community of searchers, investors, lenders, brokers and other professionals. Over 80% of those involved in searchfunds maintain a Searchfunder account to help them network, hire, and mentor others.

What are the benefits of membership?

In addition to accessing the most active online network of business buyers, Searchfunder licenses research that is simply not cost effective for individuals. Access over 15,000 industry reports and 50,000 transaction financials. You also get monthly credits for contact information for your company sourcing campaign with the option to purchase more at drastically discounted rates. Searchfunder has pre-purchased access from these data providers in order to empower individual buyers and to help searchers level the playing field versus private equity.

Do you have deals?

While we are primarily a buy-side network, we do have hundreds of brokers that regularly post deals to the community.

Can I find an internship on Searchfunder?

Absolutely! We have the industry's largest intern job board. If you are considering a search, the first step is to help another business buyer so you can hit the ground running.

What does it cost?

Searchfunder is a subscription service. We offer flexible monthly, annual and lifetime memberships.

Monthly

$79 / month

Annual

$19 / month

Lifetime

$432 / once

Those who maintain an account with us for over 4 continuous years are permanently added to the community without the need for a membership.

Do I need an MBA to join?

While a large number of our members come from dedicated programs at Harvard Business School, Stanford GSB, Chicago Booth, and other top programs, searching is no longer reserved for the elite. With the current abundance of dry powder in private equity, and an increasing number of business owners reaching retirement age, good deals rarely go unfunded.

Post a question, deal, job, etc...

Make a post...

Complete registration to post.

by a searcher from IESE Business School
in Barcelona, Spain

9yrs ago

How do you deal with an owner that asks you to put money upfront in a bank account?

I'm in advance discussion with an owner. We signed an NDA, he shared detailed financial information, I visited his offices, I visited some of his clients and we are starting to discuss price.

I sent him a LOI. The only thing missing in it is the price which we are currently discussing.

He says that two of his advisers said that I should put 15% of the amount upfront in a bank account.

Additionally, he says that if the deal falls apart, he should be compensated for his time and costs.

I am sure lots of you had to go through a similar situation. Anybody could share experiences and how they dealth with it? Best practices?

5 Likes

296 Views

reply by an intermediary 7yrs ago
from Algonquin College in Ottawa, ON, Canada

We sell many businesses each month and always require the purchaser to put up a refundable deposit. If they can not write a check for the deposit they are unlikely to write the check at closing. The deposit is always refundable as we do not want to be involved in disputes between buyer and seller over fault. Our sellers are willing and able and we force them to finance part of the transaction in order to protect the buyer however no deposit-no deal.

reply by a searcher 6yrs ago
from University of Vermont in New York, NY, USA

I have not read all the comments, but you might flip the tables and ask the seller for the same thing. In my personal experience, it is MUCH more common for sellers to flake out and not close than it is for us to do so.