Glossary

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Seller Financing

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In mergers and acquisitions, seller financing involves a financial arrangement where the seller provides funding to the buyer to facilitate the acquisition. Instead of relying solely on external financing sources, the buyer borrows directly from the seller. This arrangement can take the form of a loan, promissory note, or other credit instruments. Seller financing is often employed when traditional financing is challenging to secure, showcasing the seller’s confidence in the business’s future success. It can enhance deal feasibility, promote smoother negotiations, and align the interests of the buyer and seller, fostering a cooperative approach to the acquisition process. In Canada, seller financing typically amount to 10% to 15% of the transaction amount.

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