5 Big Questions to Consider when Financing a Business Sale

By Michael D. Rubin, CEO & Founder · Updated September 2026 · 800 words

Before you take a business to market, answer five financing questions: the lowest net amount you would accept, the tax cost of different structures, the terms you would accept on any seller financing, what must be paid off at closing, and whether the buyer takes on any debt. The answers shape which offers you can accept and how quickly you can respond when a good one arrives.

Deal structure is not something to leave until an offer is on the table. Owners who have thought it through negotiate with confidence; those who have not tend to stall, and a stalled deal loses momentum.

1. What is the lowest net amount you would accept?

Your walk-away number should be what you keep, not the headline price. Start with the price, subtract debt that must be repaid, transaction costs such as the advisor's fee and legal and accounting bills, and estimated taxes, and see what is left. Then decide the minimum that makes selling worthwhile for your plans. Keep the number between you and your advisor. Its purpose is to let you say yes quickly to a strong offer and no calmly to a weak one. Write the calculation down and update it as offers arrive, so each one is judged against the same yardstick.

2. What are the tax consequences of each structure?

Two offers with the same price can leave you with very different amounts after tax. Whether the buyer purchases the company's assets or your ownership interest, how the price is allocated among equipment, goodwill and other items, and whether part of it is paid over time all affect your tax bill. These are questions for your CPA, ideally a year or more before the sale, because some planning is only possible in advance. Your M&A advisor should work with the CPA so that negotiations turn on after-tax value rather than the headline figure. Ask your CPA for a rough estimate of the tax on a typical offer before you go to market, so the walk-away number in the first question is realistic.

3. If you carry a note, on what terms?

Many sales include some seller financing, where you accept part of the price as a loan the buyer repays over time. Decide in advance what you would accept: the share of the price, the interest rate, the length of the note, the security you would hold, and whether you would require a personal guarantee. If the buyer uses an SBA or bank loan, the lender will usually insist that your note ranks behind its loan and may limit when you can be paid. Favorable terms can support a higher price and a wider pool of buyers, but they also leave part of your money at risk. Our business financing page explains how these pieces fit together.

4. What has to be paid off, and who pays closing costs?

List everything that must be settled at or before closing: bank loans, lines of credit, equipment leases, unpaid vendor balances and any other creditors, secured or not. Then work out who pays which transaction costs. Each side normally pays its own advisors, and some costs are split by agreement. Knowing the total before negotiating avoids a surprise when the closing statement arrives. Also check for items that follow the business, such as customer deposits or prepaid service contracts, which buyers often expect to be credited at closing. Our own fee, for example, is paid only on success and is set out in the engagement letter, as explained on our fees page.

5. Will the buyer assume any debt?

Most sales of established companies are priced on a cash-free, debt-free basis: the seller pays off debt and keeps excess cash, and the buyer receives the business with a normal level of working capital. Some buyers propose assuming certain long-term or secured debt instead, which reduces the cash you receive at closing and may need the lender's consent. If a buyer does take on debt, make sure the lender formally releases you from any personal guarantee. Settle early which approach you expect, and read how debt and excess cash are treated when a company is sold. When offers arrive, our guide on comparing offers shows how to set them side by side.

How MDR & Associates structures the deal with you

MDR & Associates works through these questions with you before the company goes to market, then negotiates multiple letters of intent at the same time so competition sets both the price and the terms. The firm works alongside your attorney and CPA and can arrange SBA, conventional and seller-financed structures. Every offer is presented to you in person, and you decide whether to accept, reject or counter. To see a starting range for your company, request the free valuation snapshot.

Where this fitsHow a business sale works, step by step →

Questions owners ask next

Is offering seller financing a sign my business is weak?

No. It is common in lower-middle-market sales and often signals that the seller believes the business will keep performing. What matters is the size of the note, its security and the buyer's ability to pay. A modest note to a well-capitalized buyer is very different from carrying most of the price.

Should I choose between an asset sale and a stock sale before going to market?

Know your preference and its tax effect, but stay flexible. Buyers often prefer to buy assets, while sellers often prefer to sell their ownership interest, and the difference can be negotiated, sometimes through price. Your CPA and transaction attorney should model both before you compare offers.