Seller financing is one of the most powerful tools in an acquisition entrepreneur's arsenal — but only when structured correctly. Done wrong, it creates misaligned incentives, cash flow strain, and post-close disputes. Here's how to get it right. **Set the Right Terms** Most seller notes fall between 5–15% of deal value, with repayment periods of 3–7 years and interest rates ranging from 6–10% annually. In today's market (mid-2026), with lending still selective, sellers willing to carry a note signal genuine confidence in the business — use that as a negotiating signal, not just a financing tool. **Subordinate Strategically** If you're using an SBA 7(a) loan or senior debt, your lender will require the seller note to be subordinated. Negotiate a standby period — typically 24 months — where no principal payments are made. This protects your early cash flow while the business transitions under your leadership. **Tie the Note to Performance Triggers** Build in contingency language. If EBITDA drops below a defined threshold in Year 1, defer payments automatically rather than scrambling to renegotiate. Sellers often accept this when framed as mutual protection — it keeps both parties invested in a smooth transition. **Secure It Properly** Document everything. The seller note should be a formal promissory note, secured against business assets (where senior lenders permit), and reviewed by an M&A attorney — not just a paragraph in the purchase agreement. **The Golden Rule** Never treat seller financing as free money. It's deferred trust. Sellers who carry paper are betting on you. Pay on time, communicate proactively, and treat the relationship like a partnership — because until that note is paid off, it is one. Structured well, seller financing bridges valuation gaps, reduces upfront capital requirements, and aligns buyer-seller incentives for a stronger transition.