Seller's Note, Earn Out Structures

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May 28, 2024

by a searcher from University of Texas at Austin in Austin, TX, USA

Curious what other US bases buyers have found success with in terms of seller's note/earn out structures on recently closed deals.

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Reply by an intermediary
from Creighton University in Los Angeles, CA, USA
I can speak on the seller note aspect. About 45% of search fund deals include seller financing, which had an 8% or less rate 86% of the time. [source: https://sigpartners.com/study] For the deal that I've seen recently, it was about 30% on a seller note pegged at prime which is very favorable for both the buyer and lenders. Once you want to talk with lenders, I've built a platform that is an automated loan broker so you can get the best interest rates. You can check it out here: https://godealwise.com/beacon
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Reply by a lender
from Eastern Illinois University in 900 E Diehl Rd, Naperville, IL 60563, USA
Seller notes varying quite a bit from deal to deal depending on structure. There are a lot of ways you can get creative with seller notes as well, including using notes with forgiveness in them. I would be happy to have a discussion and go through what is required with seller notes and some potential structures. We have seen a lot of different things done. Depending on the type of financing you plan to use, that can impact what is allowed with your seller note or notes. You can also do multiple notes. You can reach me here or directly at redacted
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