Is it more common to seller-finance an Employee Ownership Trust or to raise external financing?

Both happen, but seller financing is common in Employee Ownership Trust transitions: the trust buys the company over time out of future profits, with the owner paid through a note instead of a single up-front check. External financing (bank debt or mission-aligned lenders) can supplement or replace it to give the owner more cash at closing. The right mix depends on the company's cash flow, how much liquidity the owner needs up front, and what financing is available.