Turning Stock from a Hurdle into a Deal-Maker

by Richard Jacobs 24th of November, 2025

Turning Stock from a Hurdle into a Deal-Maker

When trying to put deals together for a business sale, one of the most common hurdles I encounter is stock. A buyer may be enthusiastic about a profitable business, but their energy fades quickly when they discover the stock component alone runs into hundreds of thousands – even millions – of dollars and hence the working capital required to support this.

But I have also learned that stock does not have to kill a deal. Over time, I have worked with buyers, sellers, and financiers to test different approaches, and many of these have allowed negotiations to keep moving. The challenge is to treat stock not just as a cost, but as an asset that can be structured creatively.

“Stock does not have to kill a deal. With creativity, it can be the enabler.”

One strategy I have used is negotiating for consignment or indent arrangements. Consignment means the buyer only pays when stock is sold, while indent ordering ties inventory to confirmed demand. In one case, this alone would have reduced the upfront outlay by several hundred thousand dollars. At other times, I have brought in specialist financiers who fund stock separately, leaving banks to cover goodwill and assets. It can be the lifeline that makes the numbers work.

Vendor finance is another tool I have leaned on. By separating the stock component from the main purchase price, sellers can allow buyers to pay it down in instalments or via deferred settlement. For a buyer under cash flow pressure, this can be the difference between walking away and pushing ahead.

“Separating the stock from the main purchase price often gives buyers the breathing space they need.”

I’ve also seen how timing makes a difference. In seasonal industries, negotiating settlement during a low-stock period means the initial bill is far smaller. Replenishment then happens naturally under new ownership. At the same time, suppliers themselves can be part of the solution. By securing extended trade credit terms – for example, 60 days instead of 30 – we’ve created enough breathing space to keep deals alive.

It’s also important to challenge what stock is really worth. I have worked with buyers to strip out obsolete or slow-moving lines that the vendor wanted to include at full value. Agreeing to exclude these, or heavily discount them, ensures only saleable stock ties up capital. In other cases, shared-risk agreements such as stock-back or swap arrangements have allowed unsold goods to be returned or shifted elsewhere, reducing the burden.

And when all else fails, I have proposed pay-as-you-sell structures. Here, stock is paid for progressively as it moves out the door. It aligns cash flow with turnover and often gives both sides the comfort they need to proceed.

“I’ve learned to treat stock not just as a cost, but as an asset that can be structured creatively.”

Large stock holdings can certainly feel like a roadblock, but I have seen time and again that they don’t have to end negotiations. With some creativity and a willingness to explore options, stock can shift from being the stumbling block to being the very thing that helps a deal come together.

And for purchasers, knowing these options are a possibility may give them the confidence to pursue businesses that might otherwise feel out of reach.

Putting deals together is not “cookie cutter” it demands creativity to overcome challenges

Tags: selling exit strategy tips small business business broker