Financing a purchase with simultaneous asset sales

When acquisition equity depends on another asset sale, the financing plan contains two closings and a transfer between them. A projected sale surplus is not available purchase cash until the sale funds, its obligations are paid and the remaining money can reach the buyer. Model the linked sequence and a delayed-sale case before relying on simultaneous dates.

A historical SEC-filed payoff letter illustrates that payoff and release outcomes depend on receipt of specified amounts and conditions. It is a corporate-loan example, not the terms of the hypothetical real estate sale below. Actual settlement, release and transfer requirements must be confirmed for each transaction.

Calculate sale cash after every identified use

Assume Asset A sells for $4 million. Selling costs are $120,000, its loan payoff is $2.5 million and an additional $80,000 must remain in an agreed post-closing escrow. Cash available from the sale is $1.3 million, before any tax amount not yet included in this example.

The investor has $700,000 of other unrestricted cash. Acquisition B requires $1.8 million of equity at closing. If A’s $1.3 million is available in time, total cash is $2 million and the investor retains $200,000 after B closes.

The $80,000 escrow is not included in the $1.3 million available cash and cannot also be counted as a post-acquisition operating reserve. If it may be released later, model that future receipt with its conditions rather than adding it to closing funds.

Put actual availability dates on the linked chain

Suppose A is scheduled to close on Monday and B on Tuesday. The schedule must include A’s funding authorization, buyer funds, existing-lender payoff, settlement completion, release conditions and the outbound transfer to B. A signed settlement statement is not itself confirmation that all funds are received and available.

Coordinate through authorized closing professionals. Do not assume moving money earlier is permitted merely because it solves the spreadsheet.

Test a seven-day sale delay

If A’s sale cash is unavailable when B must close, only $700,000 is present against $1.8 million required equity, leaving a $1.1 million timing gap. The eventual $200,000 cushion does not fund that gap.

A hypothetical committed short-term facility could cover $1.1 million, but it requires its own acceptable collateral, conditions and lender consents. Assume, solely for comparison, a 1% fee and 12% simple annual interest for ten days on an actual/365 basis. The fee is $11,000 and interest approximately $3,616.44, totaling $14,616.44 before other costs. If paid from the eventual sale surplus, the original $200,000 cushion falls to $185,383.56.

This is not an available financing offer. If the bridge is secured by A, it may change A’s payoff and sale conditions. If secured by B or guaranteed by the sponsor, it may affect B’s lender approval. Include the added debt rather than treating it as invisible temporary cash.

Test a lower sale price separately

Suppose A’s price falls to $3.7 million and selling costs remain 3%, or $111,000. With the same $2.5 million payoff and $80,000 escrow, sale cash becomes $1.009 million. Combined with $700,000, total cash is $1.709 million, leaving a permanent $91,000 gap against B’s $1.8 million equity need.

A timing bridge does not solve that permanent deficit unless another source repays it. Separate delayed receipt from insufficient proceeds. If taxes or additional liens also reduce sale cash, add them as explicit uses before deciding what can be committed to the purchase.

Establish alternatives before the dates converge

Potential alternatives include an agreed change in closing sequence, additional verified equity, a documented financing source or a revised acquisition structure. Each requires its own approvals and costs. A purchase-contract extension is not effective because the buyer’s sale is delayed; counsel must confirm the actual contractual path.

If either transaction has an outside date, rate-lock expiration or deposit exposure change, include it in the same calendar. A one-day shift can create more than one cost or approval issue.

Before releasing acquisition funds, reconcile the final sale statement to the original $1.3 million estimate and confirm the exact amount available. Preserve a separate operating reserve if needed after acquisition rather than consuming every dollar merely to close.

The final linked-closing schedule should show net sale cash, transfer timing, acquisition equity, temporary funding and the fallback for lower proceeds. It turns “the sale funds the purchase” into a sequence that the parties can actually verify and execute.