What does a typical Canadian deal structure look like?

There is no single template, but most deals that actually close in Canada are built from the same handful of pieces, stacked in a fairly consistent order of priority. Understanding the stack matters more than knowing any individual piece, because each layer’s terms depend on what sits above and below it.

The senior layer: secured lender debt

A bank, credit union or BDC typically takes the senior secured position, meaning it gets paid first and holds security over the business’s assets. This layer is usually the largest single piece of financing, but it is also the most conservative, sized to what the business’s cash flow can service and secured against assets the lender can realistically recover if things go wrong.

The subordinate layer: vendor take-back financing

A seller who agrees to be paid part of the price over time is effectively extending credit, and that credit is almost always subordinated to the senior lender, meaning the seller gets paid after the bank in a default scenario. Sellers accept this because it widens the pool of buyers who can close and can support the sale price; buyers value it because it reduces the cash needed up front and signals the seller’s confidence in the business.

The equity layer: the buyer’s own capital

Every layer above depends on the buyer having genuine equity in the deal. Lenders and sellers alike want to see the buyer’s own money at risk, not just borrowed money on top of borrowed money, because it aligns the buyer’s incentives with everyone else’s once the business is theirs to run.

Where the layers interact

The senior lender will typically require an intercreditor or postponement agreement with the seller before advancing, spelling out that the vendor take-back stays behind the bank and cannot be accelerated or enforced in a way that threatens the bank’s position. Negotiating that agreement is frequently as important to getting the deal financed as negotiating the price itself, and it needs to happen early rather than as an afterthought at closing.