The buyer is asking us to take a ten percent seller note but is refusing to keep our EOS operating system or our leadership team in place. How do we protect our note from default if they ruin the culture and operations we built?

Question

Tyler Smith · Accepted Answer

The request for a seller note always introduces risk, but trying to control the buyer's post-close operational decisions is a losing battle. Once you sell, they own the company, and they have the right to run it as they see fit, even if that means abandoning the EOS® operating system. Instead of forcing them to keep your culture, you must protect your seller note through strict financial covenants and security instruments in the note purchase agreement. Your focus should be on collateral and acceleration clauses. Insist on a first-priority security interest in the assets of the business, or at least a second-position lien behind their senior bank lender. Include covenants that restrict the buyer from paying themselves management fees, issuing distributions, or taking on additional senior debt if the company's debt service coverage ratio falls below a specific threshold. Furthermore, write a clause that triggers an immediate acceleration of the note if key leadership positions on the Accountability Chart are eliminated without qualified replacements who meet clear performance criteria. If they dismantle the team and performance tanks, the entire outstanding balance must become due immediately. This forces the buyer to respect the operational structure you built because breaking it becomes too expensive. Protect your cash with legal teeth, not sentimental wishes about how they will treat your people.