Forgivable seller note best practices

by a searcher from New York University - Leonard N. Stern School of Business

6 months ago

What are the most common ways seller notes are made forgivable? 

Examples I've come across:

If revenue is less than $3mm, seller note balance and all interest are void and forgiven reducing the note value to $0 and eliminating the debt obligation fully.

If DSCR falls below 1.5 in Y1, reduce seller note by $500k. If DSCR falls below 1.5 in Y2, reduce seller note by $500k. 

I know one size doesn't fit all, so I'm asking for collective wisdom on what has worked in your deals.

All thoughts appreciated.

2 likes
164 views
10 comments

searcher from University of North Carolina at Chapel Hill

Good information. I found this site to be pretty useful in explaining the options. https://newsletter.freedomthroughacquisition.com/posts/maximize-upside-minimize-risk-essential-sba-compliant-risk-protection-for-acquisitions

5 months ago | like reply | 0 likes

searcher from The University of Michigan - Stephen M. Ross School of Business

following

5 months ago | like reply | 0 likes

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