# The 60/40 Deal Structure: 60% Commercial Debt, 40% Seller Rollover

Source: https://apply.grosfjeld-li.com/guides/60-40-deal-structure · By Josh Li, G&L M&A Advisory · Updated 2026-10-14

**Short answer:** A 60/40 deal structure funds a business purchase with 60% commercial (senior) debt and 40% seller rollover, where the seller keeps a 40% stake instead of cash. There is no seller finance in this version and no buyer cash. The lender takes security over 100% of the business’s assets instead of a personal guarantee, and the seller shares in future growth.

**Key points:**
- 60% of the price comes from a commercial lender; 40% is rolled by the seller into a stake they keep.
- Seller finance is 0% in this structure; the three funding parts are senior debt, seller finance and seller rollover.
- No personal guarantee: the lender takes security over 100% of the business’s assets instead.
- It suits sellers who want substantial cash now and a real share of future upside.
- Lower debt than a 70/20/10 makes it easier to clear a DSCR of around 1.5x.

## What is a 60/40 deal structure?

A 60/40 deal structure splits the purchase price into two parts:

- **60% commercial debt (senior debt):** a loan from a lender, secured on the business being bought, paid to the seller at settlement.
- **40% seller rollover:** the seller keeps 40% of the business instead of taking that part of the price in cash. See [seller rollover explained](https://apply.grosfjeld-li.com/guides/seller-rollover-explained).

The third possible funding part, **seller finance** (a seller note repaid over time), is set to zero here. The buyer contributes no cash.

## How does a 60/40 deal work?

### Illustrative example

*Illustrative only. Real terms depend on the business, the lender and the seller.*

A business is bought for **$1.5M**.

| Funding part | Share | Amount | What the seller gets |
|---|---|---|---|
| Commercial debt | 60% | $900k | Cash at settlement |
| Seller finance | 0% | $0 | — |
| Seller rollover | 40% | $600k | A 40% stake they keep |
| Buyer’s cash | 0% | $0 | — |

After settlement, the buyer owns 60% and controls the business. The seller owns 40%, receives their share of dividends, and shares in any future sale.

### Testing the repayments

Only the $900k loan has fixed repayments. Rollover has none. That keeps annual debt service lower than in structures with more debt.

*Illustrative:* if the $900k loan costs around $200k a year to repay, the business needs about $300k of reliable cash profit to hit a DSCR of 1.5x. DSCR is cash profit divided by annual repayments. See [DSCR explained](https://apply.grosfjeld-li.com/guides/dscr-explained).

## Why is there no personal guarantee in a 60/40 deal?

A personal guarantee makes you personally liable for the loan if the business can’t repay. In the 60/40 structure, the lender takes security over **100% of the business’s assets** instead. Two features make that acceptable to a lender:

1. **Lower leverage.** Only 60% of the price is borrowed.
2. **A seller with skin in the game.** The person who built the business still owns 40%. They have every reason to make the handover work.

Each lender decides case by case, so this is a structure to negotiate, not a promise. See [how to buy a business without a personal guarantee](https://apply.grosfjeld-li.com/guides/buy-a-business-without-a-personal-guarantee).

## Why would a seller accept 60/40?

A seller in a 60/40 deal gets:

- **Most of the cash they need now.** 60% at settlement often clears the owner’s debts and funds the next stage of their life.
- **A second payday.** Their 40% stake is paid again if the business is sold later.
- **Upside from your platform.** If you combine their business with yours, cut duplicated costs and cross-sell, their 40% may be worth more than the $600k they rolled.
- **Ongoing involvement.** Some owners want to stay connected without the daily load.

In our experience, the sellers who choose 60/40 are confident in the business and in the buyer. They aren’t looking for the exit door. They are looking for a better-resourced partner.

## When does the 60/40 structure fit best?

| Situation | 60/40 fit |
|---|---|
| Seller is mid-career and wants a partner, not an exit | Strong |
| Goodwill sits with the owner (clients loyal to them) | Strong: they stay invested through handover |
| You want to avoid a personal guarantee | Strong |
| Seller is retiring and wants a clean break | Weak: consider [70/20/10](https://apply.grosfjeld-li.com/guides/70-20-10-deal-structure) |
| Seller wants no lender involved | Weak: consider 100% vendor finance |

## How do you put a 60/40 deal together, step by step?

1. **Confirm the seller wants to stay invested.** Ask about their plans for the next five years before you mention structure.
2. **Work out reliable cash profit.** Strip out one-off items and the owner’s personal expenses to see what the business really earns.
3. **Size the loan.** Check that 60% of the price can be repaid at a DSCR of around 1.5x.
4. **Speak to lenders early.** Confirm they will lend on these terms with security over the business’s assets and no personal guarantee.
5. **Agree the shareholders’ terms in principle.** Control, dividends and exit should be in the [letter of intent](https://apply.grosfjeld-li.com/guides/letter-of-intent-buying-a-business), not left for later.
6. **Run due diligence and close.** Verify the numbers, then settle and start the handover.

## What does the lender look at in a 60/40 deal?

Without a personal guarantee, the lender relies on the business itself. Expect questions about:

- **Cash profit and its stability** over recent years, not just the latest one.
- **Customer concentration:** whether a few clients make up most of the revenue.
- **The assets** the lender will hold security over, such as equipment, receivables and contracts.
- **The buyer’s track record** running a similar business.
- **The seller’s commitment:** how long they will stay through the handover.

A strong answer on each makes a no-guarantee structure far easier to agree.

## What are the risks of a 60/40 deal?

- **A large minority partner.** 40% is a meaningful stake. Disagreements about strategy or dividends are more likely than with a 10% stake.
- **Exit complexity.** Selling or restructuring later may need the seller’s agreement.
- **Valuation disputes.** If you want to buy the stake later, the price needs a clear formula.

A shareholders’ agreement covering control, dividends, drag-along and tag-along rights, buy-back terms and leaver terms handles most of this.

## What kills 60/40 deals?

- **Pitching it as "you only get 60%."** The seller gets 60% now plus 40% of a bigger business.
- **No clear plan for growth.** If the seller can’t see how their stake grows, rollover looks like a loss.
- **Leaving control vague.** Agree what the buyer decides alone and what needs consent before the LOI.

> General information only, not financial, legal or tax advice.

## How does 60/40 compare with the other structures?

60/40, 70/20/10 and 100% vendor finance all combine commercial debt, seller finance and seller rollover in different ratios. Read the full comparison in [how to buy a business with no money down](https://apply.grosfjeld-li.com/guides/how-to-buy-a-business-with-no-money-down).

G&L M&A Advisory helps owners of $1M+ businesses structure deals like this, targeting a signed LOI within 90 days. [See if you qualify](https://apply.grosfjeld-li.com/) for an acquisition strategy call.

## FAQ

### What does 60/40 mean in buying a business?

It means 60% of the price is funded by a commercial lender and 40% is rolled over by the seller into a stake they keep. The buyer puts in no cash.

### Does the buyer need a personal guarantee in a 60/40 deal?

In G&L’s 60/40 structure, no. The lender takes security over 100% of the business’s assets instead, though every lender decides case by case.

### Who controls the business in a 60/40 structure?

The buyer holds 60% and controls the business. The shareholders’ agreement lists any decisions that need the seller’s consent.

### Is there seller finance in a 60/40 deal?

Not in this version. The funding is 60% commercial debt and 40% seller rollover, with seller finance at zero.

### How does the seller get the rest of their money in a 60/40 deal?

Through dividends on their 40% stake and through the sale of that stake later, either to the buyer or as part of a sale of the whole business.