Seller note hopes and desires

November 14, 2023

by a searcher from Harvard University in Toronto, ON, Canada

Has anyone been recommended by seller and their reps to have seller note at first position?
Are banks even considering seller note at first position?

I recently was suggested this and I kept my head straight with a poker face because I felt the parties were wasting their own time by even proposing such an innovative out of the world structure.

Bankers - any response for above will be appreciated.

Reply by a lender
from Eastern Illinois University in 900 E Diehl Rd, Naperville, IL 60563, USA

If you plan to have any sort of senior debt, there is no way any lender is going to do the deal with a seller note in the first position. The only way a first position seller note works is if the seller is the only one providing the financing. I hope this helps to clarify. It sounds like they are not being realistic. Sorry.

Reply by a searcher
from Northern Alberta Institute of Technology in Edmonton, AB, Canada

Seller's tend to have this position...they're suffering from parallax error. Often the vendors on founder led businesses (who, presumably don't currently answer to the bank) can't understand that the bank would have any say on their rights or what happens with their business. But it's a new day when they sell their company.

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