Seller Note

April 05, 2023
by a searcher in New York, NY, USA
Have a call tomorrow where I have to convince the owner to take around 30% to 40% of the purchase price as seller note. Cash flow ~$500k, Purchase Price $1.3M. Any strategies that people have found to be particularly effective?
from Harvard University in Colorado Springs, CO, USA
examples include
deferred taxes, if delaying the payment puts them in a lower tax bracket in subsequent years
Offering an attractive interest rate (you might be able to be slightly above market rate)
next, lay out the reasons (if true) that this will be something likely needed from any buyer. Maybe the bank is requiring it for DSC reasons or maybe it’s required in order to generate an acceptable IRR to equity investors (be careful about how you frame that though).
finally, you always have to be willing to walk away. Don’t accept a bad deal just to have a deal. A bad deal is worse than no deal every time.
best of luck
from Universidad Internacional del Ecuador in Cuenca, Ecuador