Latest / The Acquisition Talk with Fexingo: Mergers, Buyouts, and Business Sales for Operators
The Seller Financing Subordination Trap That Cost a Buyer $35 Million
In this episode of The Acquisition Talk, Lucas and Luna dissect a common but dangerous M&A pitfall: the seller financing subordination trap. Using the real-world example of Pacific Rim Coatings—a $120 million acquisition in 2022 that included a $30 million seller note—they explain how a seemingly harmless subordination clause allowed the seller to convert their note into majority equity when the buyer’s EBITDA dipped. The result: the buyer lost $35 million in legal fees, write-downs, and forfeited control. Lucas walks through the specific contract language—the springing lien, the conversion…
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