I have a question about small detail in QLA program from Dan Pena about company acquisitions and business loan lending in general. My question is related to the 03:45 (minute:second) moment of the following video:
I would like to know regarding Bank Financing vs. Owner Financing in company acquisition: According to my understanding the loan, which is subject of bank financing (bank loans money to me and does NOT send it to the the current owner for acquiring his company) is used to make monthly or yearly payments to the current owner for pre-discussed quantity of months or years in order to fully pay the asking price of entire company to acquire it. So I would be using lended money to do partial payments to the seller. However, the guy on the video is saying 60% bank finance and 40% owner finance. How is this possible? I know that owner financing means I am paying during discussed time periods (e.g. once per month) instead of entire asking price at the same time. But why are the numbers separated on 60 and 40 then? I don't understand the difference between 60 and 40. The bank finance means how much out of total asking price they lend to me, right? But if they lend only 60% and sends this money to me (not to the seller but to me so i can pay to the seller!!!) does it mean I have to do 40% owner financing somehow else on my own, e.g. to get 40% of asking price from different source (e.g. personal earnings, different bank, crowdfunding investments, etc.)? My problem is that I don't understand how could I pay just 40% to the seller if I need to pay 100% out of loan amount but there is 60% loan amount? Thank you!