M&A Seller Financing: Third-Party Loan Servicing
M&A Seller Financing: Third-Party Loan Servicing – An iGaming Perspective
As an advisor who has structured dozens of iGaming exits over the last decade, I can confirm that outsourcing note administration to a neutral servicer is no longer a luxury—it is a regulatory and relationship-management necessity.
A specialised third-party loan-servicing agent receives the buyer’s instalments, applies interest and late fees, issues 1098/1099 tax forms, and wires the net proceeds to you on schedule. In practice, this removes two chronic distractions in post-closing life: (i) chasing arrears and (ii) reconciling complex ledgers. The result is cleaner audit trails, lower AML exposure, and—crucially for betting deals—more time to steer the licence transition and retention campaigns.
What a Servicer Actually Does
Instead of a long checklist, think of the servicer’s workflow as a closed loop: onboarding the promissory note, automating ACH pulls from the buyer’s bank, allocating principal/interest in real time, and generating monthly and year-end statements for all parties.
Because interest, late-fee and maturity calculations are made inside their platform (rather than a spreadsheet), disputes are rare and easy to evidence. Automated Clearing House rails also mean funds arrive faster and with lower card-processing costs—an important edge when betting margins are tight.
Leading Note-Servicing Platforms
| Servicer | Core Focus / Differentiator | Website | Phone |
|---|---|---|---|
| Automatic Funds Transfer Services (AFTS) | 24/7 Web-, Phone- & MobilePay modules for frictionless ACH pulls | afts.com | +1 206 254 0975 |
| Payment Servicing Corporation (PSC) | Custom escrow instructions for owner-financed transactions | paymentservicingcorporation.com | +1 406 257 8186 |
| Accruit | Combines note servicing with 1031 exchange infrastructure—useful for roll-ups | accruit.com | +1 866 397 1031 |
| Escrow Services, Inc. | Wrap-around and second-mortgage specialists; strong FAQ library | escroserv.com | +1 800 654 7870 |
| Midwest Asset Acceptance | Tier-1 primary & special servicing (work-out support for troubled notes) | midwestassetacceptance.com | +1 585 377 2810 |
| Gregory Funding | Proprietary RMBS servicing platform; Fitch-rated for compliance rigour | gregoryfunding.com | +1 888 324 3578 |
All providers operate nationally and offer electronic disbursements to international sellers—a frequent requirement in cross-border iGaming exits.
Pros
Regulatory confidence: independent escrow satisfies gaming-commission segregation and AML rules.
Relationship shield: delicate payment-chasing is handled by a neutral party, preserving goodwill.
Data integrity: SaaS portals deliver auditable ledgers that dovetail with VDRs and post-merger earn-out tests.
Tax automation: 1098/1099 issuance and year-end summaries spare both sides manual effort.
Cons
Service fees: 0.25 %–1.00 % of the note balance annually, which can erode yield on smaller deals.
Onboarding lag: KYC/AML checks may add a week to closing if the buyer’s documentation is incomplete.
Less flexibility: payment-deferral amendments must flow through the servicer’s workflow, adding paperwork.
Data-privacy risk: although rare, a breach at the servicer could expose sensitive financial data.
Frequently Asked Questions
Q: Do gaming regulators insist on third-party servicing?
A: Not universally, but many require proof of segregated trust accounts. Using an established servicer satisfies that box without bespoke escrow arrangements.
Q: Can the buyer pre-pay without penalty?
A: Yes – provide the servicer with the promissory note’s pre-payment clause; they will calculate the exact payoff and remit funds accordingly.
Q: How quickly do ACH funds reach my account?
A: Standard settlement is T+1 US banking day; wires for EU-based sellers often clear the same day if instructions are on file.
Q: What happens if the buyer misses a payment?
A: The servicer issues a late-notice, applies contractually agreed charges, and escalates after the cure period. Meanwhile, your relationship with the acquirer remains cordial—crucial if you retain an earn-out or consulting role.
Leveraging a third-party servicer isn’t merely administrative hygiene; it is a strategic lever that lets iGaming sellers protect value, demonstrate compliance, and stay laser-focused on post-closing growth metrics.
