Recent data from BizBuySell’s survey reveals a shift in seller attitudes toward offering seller financing, reflecting a growing motivation to close deals despite market challenges. In 2024, 28% of sellers indicated they would consider offering seller financing, up from 24% in 2023. Simultaneously, opposition to seller financing has declined, with 40% of sellers now completely against the idea, down from 44% in 2023. This trend highlights a more flexible mindset, with more sellers keen to finalize transactions rather than wait on the sidelines.
The current economic environment, characterized by higher interest rates, has increased acquisition costs and pressure on business values. As a result, creating win-win deal structures has become critical to maintaining market momentum. Jon Pastoor, an M&A advisor at Calder Capital, observes, “With higher interest rates, we did see an effect of having more seller financing than in years past in order to reach a desired valuation. Seller sentiment seems to be picking up, and now with a potential drop in rates, I expect that to continue.”
Higher interest rates have made it more difficult for buyers to service debt, shifting the focus to deal structure and financing terms. John English, a Texas-based M&A advisor, notes, “It’s really more about debt service than purchase price. So, it boils down to rates, terms, or the willingness of the seller to finance themselves. We have crafted some highly creative deal structures, which makes us somewhat immune to other market forces.”
As buyers and sellers adapt to current market realities, the importance of flexibility and creative deal-making has never been more apparent. With a continued rise in seller financing, deals are moving forward, allowing both parties to navigate the challenges of higher interest rates while still achieving their goals.
