• Risk retention: You keep some business risk while giving up most of the upside.
• Buyer commitment concerns: If you finance 90-100%, buyers may lack sufficient "skin in the game."

That's it. The downsides are simpler than most sellers assume.

Seller financing typically increases your business value significantly. Even carrying just 5-20% can boost your total price enough that your cash-at-closing equals or exceeds an all-cash deal.

Why this works: Lenders view seller financing as a vote of confidence in the business, making loans easier to approve. More financing options = more buyers = higher prices.

Seller financing expands your buyer pool beyond just well-capitalized purchasers. This lets you prioritize the right person—perhaps a key employee or someone who shares your vision—over the highest bidder.

The legacy factor: Sometimes continuing your company culture and protecting employee jobs matters as much as maximizing cash.

"My price, your terms; your terms, my price."

Cash buyers expect discounts. Sellers who provide attractive financing can command premium pricing. The math often works in your favor.

Counterintuitive insight: Buyers with smaller down payments often pay the highest prices because they can dedicate more cash flow to debt service.

A seller note gives you a legitimate reason to stay in touch and receive periodic business updates—providing peace of mind about your company's future.

Sweet spot: 5-20% of the purchase price

Factors that matter:

• Business strength and cash flow
• Balance sheet quality
• Buyer qualifications
• Your financial needs

Typical structure:

• Length: 5-10 years
• Payments: Often deferred 2+ years to help new owners establish themselves
• Interest rate: Competitive with bank rates (if bank charges 8%, you get 8%)

Win-win opportunity: You earn better returns than CDs or bonds while buyers pay standard market rates.

Due diligence requests:

• Business plan review
• Annual/quarterly financials
• Buyer credit reports

Consultation rights: Include terms for paid or unpaid consulting if the business struggles—you built it, you know how to fix it.

• Personal guarantees: Since business assets typically secure the bank loan, require personal guarantees from buyers.
• Default provisions: Work with your attorney to define what happens if payments stop—acceleration clauses, penalty rates, late fees.
• Bank coordination: Understand how the primary lender's rights affect your collection options.

Seller financing isn't about desperation—it's about strategy. The right structure can increase your sale price, help you choose the ideal successor, and create a better outcome for everyone.

Every situation is unique. Work with experienced M&A advisors and attorneys to structure terms that protect your interests while creating an attractive deal.

Contact our team for expert guidance on business transitions.