For those who have looked at 100% or nearly 100% seller financing, how have you structured the legal mechanics and what are the levers you used to get the seller comfortable with the structure?
What happened if you didn't pay the note - was it secured by the equity? i.e. if you didn't make note payments, seller could take the "keys" / company back?
Did you offer a PG or limited PG on the seller note? Was the note secured by the assets?
I am looking at a deal with 100% seller financing and haven't used this structure in the past. The sellers are uncomfortable with the structure and I'm trying to figure out what/where I can give in order to get them more comfortable. Typically there's a reason or multiple reasons the business can't transact with meaningful cash upfront and/or a bank lender, so it's not without risk, but looking to see what others have done to structure these type of 100% seller financed deals.
Thanks for any and all feedback.
100% Seller Financing - Structuring Levers?
by a searcher
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I might offer a limited PG but not a full one. If they're getting the assets/equity back on a default, it doesn't make sense to me while they would also get full value on the note.
Hope that's helpful