The short answer is yes.

Most seller’s provide a portion of seller financing. How much is usually determined by the overall deal structure. An all cash deal sold at a discount of 1.0 x’s revenues or less, there may be very little if any seller financing. If the practice is sold for a higher multiple then customarily the seller will finance a portion of the note.

Seller financing is twofold. It helps the buyer because they have confidence that the seller is just not handing over the keys and saying “good luck.” The seller has a monetary interest in making sure the practice is transitioned smoothly. The buyer obviously wants to retain as many clients as possible and the seller will want to get as much as they can for the practice and will assist the buyer in this transition period.

Seller financing can also be more creative then bank financing. This will allow for better rates and terms for the buyer. The buyer will get favorable rates and terms while the seller will make a nice little nest egg on the interest. A $200,000 note with a 7% rate over 5 years will calculate out to around $37,614.38 in interest. Not bad for the seller!

If the buyer is looking at obtaining outside bank financing for the down payment, then typically the lenders will like to see a seller note. I would guess for the same reasons as mentioned above.

With the current economy and lending going on currently, seller financing has become much more prevalent in order to get deals closed. The bottom-line is that it is truly a win-win for both sides.

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