Seller Financing

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What It Means

Seller Financing, also commonly referred to as a Seller Note, refers to a loan offered by a Seller to help a Buyer fund a portion of an Acquisition.

Why It’s Important

Seller Financing is very common in Middle Market Acquisitions, where Buyers may not have access to enough cash through traditional sources to purchase the company. The terms of the loan are negotiated as part of the Acquisition and depend heavily on the characteristics of the Buyer, the company being acquired, and the overall capital structure of the Acquisition.

Seller Financing offers several advantages to Buyers and Sellers, but it also introduces risks and financially ties the Buyer and Seller together for years to come after the Acquisition.

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