An honest comparison, with real numbers — not a sales pitch for either option.
When a buyer can't get bank finance, sellers usually end up looking at one of two routes: a cash buyer offering a quick lump sum, or vendor finance where I pay you over an agreed period, directly, from the business's own profits.
Both are legitimate. But they're not the same deal, and they don't pay the same. Here's the honest comparison, worked through with real numbers.
Completes fast — often within weeks. But a cash buyer knows you may have limited options, and that shapes the number they offer. They need to raise the full price upfront, so the price is discounted to make that upfront risk worth their while. You get certainty and speed. You give up a chunk of the value.
I don't need a bank to say yes, so the price doesn't have to be discounted to compensate for that risk. You're paid over an agreed period, funded by the business's own trading profits, with a legal charge over the assets, retention of shares or title until you're paid in full, and a written, solicitor-drawn payment schedule. You get a fairer total figure. You wait for it, on agreed terms, with real security behind it.
Take a business turning over £800,000 a year, generating £120,000 net profit.
A cash buyer in this position typically wants a discount for the certainty and speed they're offering, and for taking on the whole amount themselves upfront. A common outcome:
Because the deal isn't held up waiting on a bank, it can be priced at what the business is actually worth:
The trade-off is honest: the cash buyer pays less but pays it now. Vendor finance pays more, but over time, secured by a legal charge over the assets, retention of shares or title until you're paid in full, and a written schedule your solicitor has drawn up and approved. Which one's right for you depends on your own circumstances — how much you need now, and how comfortable you are being paid over a period rather than in one go.