Thoughts on a Deal with High Seller Financing?

February 15, 2025

by a searcher from McGill University in Montreal, QC, Canada

Hey everyone, I'm curious if anyone's come across or worked on a deal like this. I'm looking at a Canadian procurement/MRO services business in the oil & gas space that's been around since###-###-#### It generates about CAD 600k in EBITDA, and roughly 68% of its revenue comes from one major client—a long-term relationship dating back to 1999 with no personal ties to the owner. The whole deal is pegged at around CAD 3M, and impressively, the seller’s already on board with roughly CAD 2.3M in seller financing. So here’s my question: has anyone done a deal with such high seller financing? I’m left with about CAD 750k to secure externally. Do you reckon I should try to raise that from a direct investor, or would it make more sense to go with bank financing and just close the deal myself? I’m especially looking to connect with direct, easy-to-work-with investors—meaning folks who aren’t part of a larger firm with lengthy approval processes. Appreciate any thoughts or advice!

Reply by a professional
from University of Southern California in North Palm Beach, FL, USA

Thanks, again, ^redacted‌ - take blessings when you can. Customer concentration is beyond the point of high risk, so the seller is wise to offer a large degree of financing for the buyer. Maybe the seller will agree to the note being conditional in case that customer bails on the company during the duration of the promissory note. The most important part of this transaction is knowing why the business is for sale, why this company has such high concentration, and the commitment of that customer to this company on specific terms.

i'd like to know if there's any bank that would provide financing on a transaction with customer concentration as high as this one. You might ask about that.

Reply by an member
from The University of Georgia in Boston, MA, USA

This deal actually sounds pretty solid, especially with the seller covering that much financing. A couple things I’d be thinking about—first, since almost 70% of revenue is tied to one client, how locked in is that relationship after the sale? Any contracts in place, or is it more of a handshake deal? Second, for the remaining CAD 750k, raising from a direct investor could give you more flexibility (no bank covenants or red tape), but a bank loan might be the cheaper route if your numbers are strong. Another option—have you looked into mezz debt or revenue-based financing? Might be a good middle ground.

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