Price versus certainty
Not every dollar in an offer has the same value or risk.
- Cash at close.Immediate value, before debt, costs, taxes, escrows, and adjustments. Hypothetical comparison: an $8 million all-cash offer and a $10 million offer with $6 million cash, a $2 million note, and a $2 million earnout are not interchangeable. The larger headline provides $2 million less cash at closing.
- Seller note.Deferred payment subject to credit, security, subordination, and collection risk. In that hypothetical $10 million offer, collecting 75% of the $2 million note and none of the earnout produces $7.5 million before taxes, costs, debt, and the time value of money. These are chosen stress-test assumptions, not probabilities.
- Earnout.Contingent value shaped by definitions, control, performance, and dispute mechanics.
- Rollover equity.Continuing exposure whose future value depends on the post-close enterprise and liquidity path. Do not count rollover equity as money available for current spending. Ask what rights, fees, dilution, leverage, and exit restrictions apply to the interest you would retain.
Before exclusivity
Bring one set of assumptions to your advisers.
Put each offer on one page: cash at closing, later payments, retained equity, debt, costs, and the capital your household needs.
- Check the terms together.Ask your CPA to check tax character and timing; your attorney to review payment conditions, security, indemnities, and control; and your financial planner to test the household spending plan. Include working-capital adjustments and employment obligations.
- Test money that may arrive late—or never.Run a downside case with no earnout and a delayed seller note. Keep rollover equity separate until its rights, leverage, governance, dilution, and liquidity path are understood.
- Leave with an owner and a deadline.Record each unresolved assumption, who will confirm it, and the decision deadline. Resolve together whether the household plan still works if the uncertain money does not arrive.