The Funnel, Ep. 13: How Do You Compare Offers?
Once you reach the bottom of the funnel, the process becomes less theoretical and far more practical. At this stage, you’re no longer asking whether to sell or how the process works—you’re evaluating real offers from real buyers. This is where many founders make costly mistakes. Multiple offers can look similar on the surface, yet lead to dramatically different outcomes depending on structure, certainty, and risk. The headline number alone rarely tells the full story.
This episode breaks down how to compare offers methodically, so you can see which deal actually delivers the best outcome—not just the biggest number.
When founders start receiving offers, it’s common to see several bids clustered around the same valuation. A business valued at $20 million may attract multiple offers within a narrow range, each claiming to be competitive.
The problem is that not all dollars are equal.
Two offers with the same headline value can have very different levels of risk, timing, tax impact, and probability of closing. Comparing offers properly requires breaking each proposal into its components and evaluating how likely each dollar is to actually reach your bank account.
Step One: Separate Headline Price From Real Value
The total offer amount is the easiest number to compare—but also the least informative. A higher offer is not automatically better. A $25 million deal may be worse than a $20 million deal if much of that value is tied to uncertain future events, subordinated payments, or buyers with limited ability to close. The goal is to understand how much value is real, how much is deferred, and how much is speculative.
Step Two: Rank the Components by Probability of Payment
A practical way to compare offers is to rank each dollar based on how likely it is to be paid. From highest to lowest probability:
Cash at close
This is the most certain value in any transaction. Cash received at closing carries no future execution risk.
Non-subordinated seller notes
Seller notes that are not subordinated to bank debt or management fees are generally high-probability payments. In some cases, the seller retains meaningful leverage if problems arise.
Subordinated seller notes
These are riskier but still often paid if the business continues to generate cash flow.
Retained equity (rollover)
Retained equity can preserve value, especially with professional investors who aim to avoid losses, but it depends on future exit outcomes.
Earn-outs
Earn-outs typically carry the lowest probability of payment. Sellers often lack control over performance metrics after closing, making these dollars the least reliable.
Once offers are broken into these categories, the differences between them become much clearer.
Step Three: Compare Offers Using a Probability-Weighted Lens
Consider the difference between:
A $20 million all-cash offer
A $22 million offer with 60% cash and 40% earn-out
Despite the higher headline number, the all-cash offer is often superior because a much higher percentage of value is guaranteed.
Now compare that to: A $22 million offer with 60% cash, 20% non-subordinated seller note, and 20% earn-out
This structure may be meaningfully better than a deal weighted heavily toward earn-outs, even if the total number is the same. The key is to focus on certainty of payment, not just total consideration.
Step Four: Evaluate Certainty to Close
Even a well-structured offer means little if the buyer can’t close. Buyers generally fall into tiers of closing certainty:
Strategic buyers or large corporates with cash on the balance sheet
Established private equity firms with committed funds
Family offices with proven liquidity
Independent sponsors who must raise capital
High-net-worth individuals or search funds with limited capital
The lower the certainty of close, the more cautious you should be—even if the offer appears attractive. In some cases, no headline premium is large enough to justify accepting a highly uncertain buyer.
Step Five: Account for Subjective but Real Factors
Beyond numbers and structure, experienced advisors also evaluate:
Buyer reputation
Cultural fit
Post-close expectations
History of honoring terms
Likelihood of retrading
These factors are difficult to quantify but often matter just as much as economics.
Comparing offers is one of the most complex and consequential decisions in a business sale. It requires more than arithmetic—it requires judgment, experience, and a clear understanding of risk.
Candor Advisors helps founders evaluate offers using structured comparison matrices that account for probability of payment, certainty to close, and real economic outcomes. By separating guaranteed value from speculative upside, founders can choose the offer that actually delivers—not just the one that looks best on paper. At the bottom of the funnel, clarity beats optimism. The right comparison framework turns competing offers into an informed decision instead of a gamble.
