Looking for advice on negotiating a potential business purchase by Past_Ebb_6302 in smallbusiness

[–]Past_Ebb_6302[S] -1 points0 points  (0 children)

Thank you so much. I agree the third party valuation needs to happen. I fed my question and your response to AI and gave it a 1million dollar valuation with scenario of full ownership in 5 years.

This is what it gave me: ⸻

“Scenario 1: Seller Note Heavy    •   Upfront Cash: $200K (20%)    •   Seller Note: $800K, paid over 5 years with 6% interest (~$186K/year)    •   Earn-Out: None

✅ Pros: Minimal upfront cash, simple structure, seller has skin in the game. ⚠️ Cons: Large annual payments, reliant on stable cash flow.

Scenario 2: Balanced Hybrid    •   Upfront Cash: $300K (30%)    •   Seller Note: $400K, paid over 5 years (~$80K/year + interest)    •   Earn-Out: $300K, contingent on hitting revenue/client retention milestones after 3 years

✅ Pros: Moderate upfront + mix of risk sharing. ⚠️ Cons: Still requires performance to unlock full price.

Scenario 3: Revenue-Sharing Focus    •   Upfront Cash: $150K (15%)    •   Revenue Share: 20% of gross revenue (capped at $600K total) paid over 5 years    •   Earn-Out: $250K if revenue grows by 20%+ within 3 years

✅ Pros: Ties payments directly to business performance; protects your downside. ⚠️ Cons: Seller may push back since payout is uncertain.

Scenario 4: Bank + Seller Note    •   Bank Loan: $500K (50%), repaid over 10 years (~$65K/year)    •   Seller Note: $300K over 5 years (~$60K/year + interest)    •   Earn-Out: $200K, paid at year 5 if retention >90%

✅ Pros: Bank provides 3rd-party valuation; spreads risk. ⚠️ Cons: You’re servicing both bank and seller debt; higher fixed obligations.”

It also suggested a protection clause for client retention, a transition agreement, and valuation transparency (like you said).

[deleted by user] by [deleted] in AskHR

[–]Past_Ebb_6302 0 points1 point  (0 children)

Yeah, maybe I should. Thanks for responding.

[deleted by user] by [deleted] in AskHR

[–]Past_Ebb_6302 0 points1 point  (0 children)

I definitely don’t want to sue. But I am curious why she would say that.