Know what remains unpaid
Write down the note amount, interest, payment schedule and maturity. Compare the cash received at closing with the amount still exposed to the buyer’s ability to pay.
Ask how prepayments, late payments and a default would be handled. Your lawyer should document the rights rather than relying on a friendly conversation.
Understand the priority of the security
Discuss what assets secure the note and whether another lender has priority. A lien does not guarantee recovery, especially if the business struggles after the handoff.
If acquisition financing is involved, obtain the lender’s requirements early. Subordination or payment restrictions can affect the value of the seller note to you.
Model the proceeds and the transition
Have your tax adviser review payment timing and allocation. Some items can receive different tax treatment, so do not assume every dollar follows the installment schedule.
Keep consulting work separate from debt repayment. Agree your post-sale hours and duties so the buyer does not treat unlimited support as part of financing the purchase.
