If we agree to seller financing and the buyer defaults on their payments, how do we structure a step-in right that allows us to temporarily reassume operational control of the business using our existing Accountability Chart and EOS® tools?

Question

Tyler Smith · Accepted Answer

Providing seller financing requires you to protect your capital with enforceable remedies. If a buyer defaults, waiting for a foreclosure process can allow the business to deteriorate completely. You need step-in rights that let you immediately take the wheel and stabilize the company.

To make this work, the promissory note and security agreement must define operational default triggers. These should include missing two consecutive payments or violating your agreed financial covenants. Upon default, the agreements must grant you the right to temporarily reassume the visionary or integrator seat on the Accountability Chart.

This structure must be clearly outlined in your transaction documents. It must stipulate that you have the authority to run the weekly Level 10 Meeting™, manage cash flow, and direct the leadership team until the default is cured or the debt is restructured.

Using your established Accountability Chart as the framework for your step-in rights makes the transition seamless. The remaining team members already know how to operate within this system, which minimizes disruption. This clarity reassures your key employees, stabilizes operations quickly, and protects the enterprise value of the business while you resolve the default.