So far we’ve covered some of the more straightforward, and some of the more lucrative categories which DSOs use in their deal structures.

A common element used is a Seller Note.

This is used when the DSO whish to pay some portion of the purchase price over time through a note.

Typically this includes some specified interest rate.

For you, it’s pretty straightforward.

If the DSO is offering this, you need to understand the principle amount of the note, the interest rate, and the term or schedule of payments.

There also may be other conditions to the note.

For example, I have seen notes termed to run concurrently with the initial term of the seller’s employment agreement with the condition that if the seller violated the terms of the employment agreement then some portion of the note would be forfeited.

Why would you take this as part of your deal?

Well depending on the DSO, this can be a route towards ultimately earning a lot more through the deal over time.