Retiring sellers open to deal structuring with earnout / seller note

March 05, 2026

by an intermediary from University of Western Australia in London, UK

We come across a lot of these. Some businesses just don’t sell the traditional way, but their owners want to move on, for one reason or another. Often they are open to structured deals where they are paid out of the future profits. I’m looking at creating a platform specifically for these deals. I’m interested in hearing from searchers as to whether these deals would be attractive. Earnout / seller note-heavy. No debt in the buyer’s cap structure (other than the seller), since the seller will not accept subordination. No SBA. But in a no-money-down deal, lenders are not required anyway. SBA is not needed. We’ve seen many businesses with EBITDA from $100k to $2m, who have failed to sell (usually via brokers), who are open to alternatives like this. Some of them literally just shut down if they can’t find a solution. Let me know in the comments or via DM what you think. These deals usually have some hair on them (maybe lower margins, sometimes more dependent on the owner than ideal, etc etc). But the risk for the buyer is obviously much lower. Not suitable for everyone but I’m wondering how much interest there would be.

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Reply by a professional
from University of Toronto in Toronto, ON, Canada

Hi ^redacted‌. I'm a dissenting voice here. Businesses that didn't sell through brokers didn't sell for a reason - there are many other better candidates available. Zero-$-down, all-seller-financing doesn't solve the business risk, as ^redacted‌ correctly noted above. If the operating and financial metrics of a business are so poor that conventional lenders won't finance a reasonable portion of the purchase/sale price and the seller has to try to induce a buyer with 100% seller-financing then, in the simplest of terms, the business generally isn't worth buying. I regularly consult in the Canadian SMB/searcher space and I advise my clients to stay away from these kinds of situations. [Thanks for including me, ^redacted‌.]

Reply by a searcher
from Rollins College in Orlando, FL, USA

I suspect there would be real interest from searchers, particularly if the structure keeps upfront equity low and most of the purchase price is tied to future performance. I know this is a structure that I find interesting, but don't find many sellers interested in it. That said, the fact that many of these businesses have already gone through a brokered process and failed to sell does say something about the risk profile. In that size range it’s often some combination of owner dependence, customer concentration, margin pressure, or financial quality that kept buyers from getting comfortable at the seller’s price. Structure can bridge valuation gaps, but it doesn’t fix underlying business risk. For buyers to engage seriously, the EV implied by the seller note and earnout still needs to line up with normalized EBITDA and actual cash conversion post-transition. If that’s the case, I think you’d find a segment of searchers willing to lean into the operational work in exchange for low upfront capital.

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