Price vs. Terms: What Matters More in a Deal?
When selling a business, most founders focus on the headline number—the price. But experienced buyers and advisors know that the structure of a deal can be just as important. Cash at closing, earnouts, equity rollovers, and seller notes all shape whether a deal works for you in the long run. In this article, we’ll explore how to think about price versus terms, and why the right mix often depends on your goals and risk tolerance.
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When founders prepare to sell their businesses, the first question is usually about price. How much is the company worth? But seasoned M&A advisors know that deal terms often matter just as much—sometimes even more—than the number itself.
Price vs. Terms Defined
Price is the valuation: the dollar amount agreed upon for the business.
Terms cover how that price is delivered—cash at closing, earnouts, equity rollovers, or seller notes
A $20 million deal structured as $12 million in cash, $4 million in retained equity, and $4 million in earnouts is very different from $18 million in all cash.
The Negotiation Framework
A useful way to think about this balance is:
Seller’s price, buyer’s terms
Buyer’s price, seller’s terms
If the buyer agrees to your valuation target, they’ll often push for flexibility on terms. If you accept their price, you may have more leverage to negotiate structure. The key is understanding where you’re willing to compromise.
Earnouts, Equity, and Seller Notes
Earnouts—future payments tied to performance—are common but risky. Once the business changes hands, you no longer control the results. Equity rollovers can create upside if the new owners grow the company, but they delay payout. Seller notes (where the buyer pays you back over time with interest) may provide steady income but carry risk if the buyer underperforms.
How to Decide
The right balance depends on your situation:
If you need liquidity now, prioritize cash at closing.
If you believe in the buyer’s ability to grow the company, equity rollover may be attractive.
If you want to avoid uncertainty, push back on earnouts.
Ultimately, the best answer is: it depends. The more clarity you have on why you’re selling and how much you need, the easier it is to navigate trade-offs.
