Marina Seller Financing and Earnouts
When a buyer and seller agree on a marina’s value but the buyer’s lender will not finance the full amount, part of the gap may be bridged by the seller. Marina seller financing means the seller accepts part of the purchase price over time through a promissory note rather than all of it at closing. Earnouts, which tie part of the price to the marina’s performance after the sale, are another tool some parties consider. Both can help a deal close, but both come with conditions and limits that buyers and sellers should understand.
This article is general information for buyers and sellers of existing, operating marinas. Every transaction is different, and lender and program rules vary. Buyers and sellers should work with qualified attorneys, accountants and tax advisors. Nothing here is legal, tax or financial advice.
How a Seller Note Works
In a typical seller note, the buyer pays the seller an agreed amount over time with interest, under terms the parties negotiate. When a senior lender is also involved, the seller note is typically subordinate to the lender’s loan, meaning the lender has priority in repayment and collateral. The lender may also restrict when and how the seller can be paid, especially if the business falls behind.
Why Sellers Consider It
- It may widen the pool of qualified buyers
- It can signal the seller’s confidence in the marina’s future performance
- It may support a price the seller considers fair
- It may have tax implications that a seller should review with a tax advisor
Why Buyers and Lenders May Value It
A seller who remains financially tied to the marina has an incentive to support a smooth transition, introduce the buyer to tenants and staff and share knowledge of the property. Some lenders view seller participation favorably, though it does not replace documented cash flow. Our article on marina loan requirements explains what lenders review.
Seller Notes in SBA Transactions
SBA program rules may govern how a seller note is structured, including whether payments can begin right away and whether the note can count toward the buyer’s equity injection. These rules change from time to time and are applied by the lender. See our article on SBA loans for marinas.
Earnouts
An earnout makes part of the price contingent on future results, such as slip renewals, revenue or another measurable outcome. Earnouts can help when buyer and seller disagree about the future, but they can also lead to disputes about how results are measured and who controls the decisions that affect them. Some lenders and loan programs limit or prohibit earnouts, so buyers should raise the idea with their lender early.
Tying Terms to Marina-Specific Risks
Some issues are particular to marinas. If a submerged land lease is approaching renewal, the parties might consider whether part of the price should depend on that outcome. If docks need repairs, a holdback or price adjustment may be discussed. Our articles on submerged land leases and marina valuation explain how these factors affect value. Any such terms require careful drafting by counsel and lender agreement.
Key Terms to Negotiate
- Amount, interest and payment schedule
- Subordination and any standstill provisions required by the senior lender
- Collateral and guarantees, if any
- Default provisions and remedies
- Prepayment rights
- Earnout measurement, reporting and dispute resolution, if used
For Sellers
Sellers who are open to carrying part of the price should consider the risks and plan for them. Our guide on how to sell a marina covers broader preparation.
US Professional Funding helps buyers finance the acquisition of existing, operating marinas and can help structure senior financing alongside a seller note where lender and program rules allow. Learn more about our marina acquisition financing.
