Paying Royalties on Inventory?

searcher profile

May 28, 2025

by a searcher from Northwestern University - Kellogg School of Management in Chicago, IL, USA

Has anyone structured a deal where they agree to pay the seller a royalty/commission/some percentage of sales of inventory left on-hand during the sale? -Also, is this allowed with SBA debt? Asking for a deal where there is a ton of inventory on the books (justified given the business and industry), and about 25% is admittedly slow-moving but required to be held. Instead of paying more upfront I am trying to structure an "inventory earnout" (would structure so it as a seller note not earnout) with the seller. Appreciate any advice and ideas!
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commentor profile
Reply by an intermediary
from The University of Chicago in Chicago, IL, USA
Do not buy the unwanted inventory. Seller keeps it (in your warehouse if needed). Seller is a supplier as and when you need the inventory. Work out the economics of purchase.
commentor profile
Reply by an intermediary
from Clemson University in Raleigh, NC, USA
On a recent project I had $3,500,000 of excess inventory. The buyer and seller agreed to consign that inventory whereby the buyer would pay the seller cost of the item upon sale. A key term is that the consigned inventory must be consumed before the buyer can sell like for like inventory acquired post-transaction.
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