Two offers can carry the same price and leave an owner with very different amounts of money. The difference sits in the paragraphs below the number: when you get paid, what has to happen first, and what can be taken back. Buyers read those paragraphs closely. Owners should read them at least as closely.
1. Start with the cash at closing
The first number to pull out of any offer is the cash you receive the day the deal closes. That is the only part of the price that is certain. Everything else is a promise, and a promise is worth less than cash in hand, however good the buyer. When owners sort each offer into "paid at closing" and "paid later, if," the ranking often changes. A slightly lower price with most of it paid at closing can be the better offer.
2. Deferred money is risk you did not have before
A seller note means part of the price is paid to you over time, usually with interest, out of the earnings of the business you just sold. In smaller deals it is common, and it is often what makes the buyer's bank loan work. But it ties your money to how well the new owner runs your company, and if the business struggles, a seller note typically gets paid after the bank does. The questions worth asking: how long is the note, at what interest rate, what secures it, and what happens if a payment is missed?
3. An earnout is paid on results you no longer control
An earnout pays part of the price later if the business hits agreed targets. It can bridge a real gap between what an owner believes the next two years will bring and what a buyer is willing to pay for today. The catch is that after closing, the buyer makes the decisions: pricing, staffing, which costs land on your division's books. Whether an earnout actually pays usually comes down to the details. Is it measured on revenue or on profit? Who keeps the books? What happens if the buyer folds your company into its own? Revenue targets are generally easier to verify than profit targets, because profit depends on cost decisions you will not be making.
4. Escrow and the working capital target come out of your proceeds
Most deals hold back a portion of the price in escrow for a period after closing, to cover claims if something stated in the purchase agreement turns out to be wrong. The amount and the length of time are negotiable. Less visible is the working capital target. A buyer expects the business to arrive with a normal level of receivables, inventory and payables to run on. If working capital at closing falls short of the agreed target, the price usually drops dollar for dollar. Owners who collect receivables hard or let inventory run down in the final months are sometimes surprised to see the number move. How the target is set, and from which months, is worth settling early rather than at the closing table.
5. Asset sale or stock sale changes what you keep after tax
Whether the buyer purchases the company's assets or its stock affects both the buyer's risk and your tax bill. Buyers generally prefer asset purchases, which let them choose what they take on and depreciate what they buy. Sellers often prefer stock sales, which tend to be simpler and, depending on how the company is organized, can be taxed more favorably. How the price is allocated across equipment, inventory, goodwill and a non-compete matters as well. None of this shows in the headline number. It is a conversation to have with your CPA before you sign a letter of intent, not after.
The takeaway
Price is the number buyers lead with because it is the number owners remember. Read an offer the way a buyer's diligence team reads your financials: line by line, asking what is certain, what is conditional and what can be taken back. The best offer is the one that leaves the most in your hands with the least left to chance.
