ISO buyers who did not take a seller note (SBA deal)

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April 17, 2025

by a searcher from Yale University - School of Management in USA

I am negotiating to buy a very attractive business but one that is subject to some risk with supplier concentration and tariffs. Our only sticking point is the seller note I proposed (10%). Might not be able to move forward if I don’t drop it. Would love to hear from buyers who did not take one (SBA deal) and what you think now post-purchase.
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Reply by a searcher
from University of Massachusetts at Lowell in Boston, MA, USA
I personally wouldn't proceed without if you think it mitigates risk. If the seller is confident in the business is should be a non-issue. I had originally done a 10% note in negotiations but doubled it after due diligence and said the bank would only move forward with this %. The seller took it and we ended up paying $0 on the sellers notes which helped us in the end.
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Reply by a professional
from University of Pennsylvania in Washington, DC, USA
I agree with Lori. Seller notes are 100% standard for lower middle market deals and allow you to have a recourse against the seller if there are problems post-purchase
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