Most business buyers see seller financing simply as a way to bridge a capital gap. But its most powerful function is strategic: a seller note ensures the seller has "skin in the game" after closing, turning them into a partner invested in your success. Learn how this alignment can lead to a smoother transition and set you up for long-term growth.

In nearly every business sale, the buyer and seller start with opposing goals for the deal's structure. Buyers push for an asset purchase to shield themselves from past liabilities and gain significant tax advantages. Sellers, on the other hand, aim for a stock sale to ensure a clean break and secure a more favorable tax outcome. This fundamental conflict over taxes and liability is the first major hurdle in any M&A transaction. Understanding why each side takes their position is the first step to negotiating a successful deal.

The indemnification clause acts as the financial referee after a business sale, making the seller responsible for costly surprises and broken promises that surface down the road. This provision uses negotiated limits like baskets, caps, and survival periods to draw the financial lines, defining exactly who is on the hook when unexpected trouble appears.