In other words, the Buyer may want to pay you, as the Seller, a portion of the purchase price at closing, and then sign a note that obligates them to pay the remainder at some future date. In general, we, as sell-side M&A advisors, are opposed to Seller financing unless you badly want out of your business and literally have no other options. The reason is the Buyer may well default on the note and you will be left with limited options to collect. You can try to foreclose, which will likely require a costly court action, and the Buyer will likely assert all types of defenses to your action.
In fact, we generally advise, as between two offers – one significantly higher asking for Seller financing and the other lower but all cash – to accept the lower all-cash offer at close.
If you are forced to finance part of the purchase price, try to (1) get as much collateral in the form of hard assets as you can (e.g., a deed on their home, a personal guarantee from someone with a high net worth), (2) make the term of the financing as short as possible, given bad things often happen for a lender the longer the debt is outstanding, and (3) work with your lawyer to eliminate any contingencies affecting your right to collect on the note.
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David Traversi, Partner, Newport (firstname.lastname@example.org)