Hi All - what's the going rate for seller note in the current environment?

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November 06, 2020

by a searcher from INSEAD in Toronto, ON, Canada

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Reply by an investor
from The University of Chicago in Chicago, IL, USA
It's best to be direct with the seller and explain that a seller note essentially has the same rights as a trade vendor (read: zero in a worst case event). Be careful not to suggest that the seller will have any junior rights / position in the company's assets. The senior lender (and mezz lenders, if applicable) will expect the seller to execute a subordination agreement at closing prohibiting same.
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Reply by a searcher
from Princeton University in New York, NY, USA
Do seller notes tend to be junior to other forms of debt, or does that vary on a case by case basis?
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