Price or Terms: The Structure of the Deal

By Michael D. Rubin, CEO & Founder · Updated September 2026 · 735 words

Price and terms trade against each other: a seller who wants all cash at closing usually accepts a lower headline price, while a seller who will carry part of the price as a note or an earnout can often get a higher number, in exchange for more risk.

An old line among business brokers has the buyer telling the seller to name the price, as long as the buyer names the terms. It survives because it is true. The right balance depends on what you need from the sale, which is why that question should be answered before any offer arrives.

The pieces behind a headline price

Two offers with the same headline can leave you with very different amounts, at very different times, with very different risk, depending on how these pieces are combined:

• Cash at closing. Paid by the buyer from its own funds and its lender's loan.
• Seller note. Part of the price you lend to the buyer, repaid over several years with interest.
• Earnout. A payment that depends on the company hitting agreed results after closing.
• Rollover equity. A stake you keep in the business, common with private equity buyers, which may be worth more or less at their eventual sale.
• Escrow or holdback. Part of the price set aside for a period to cover claims under the purchase agreement.
• Working capital adjustment. A true-up that raises or lowers the price depending on the receivables, inventory and payables left in the company.

How structure moves the price

The more cash a seller demands up front, the more the buyer must raise, and the more its lender will test the price against the company's cash flow. SBA 7(a) loans are common for smaller acquisitions, and lenders often expect the seller to carry part of the price, which also shows the seller's confidence in the business. A seller willing to finance a portion widens the pool of buyers who can close and usually supports a higher price.

The trade-off is risk. A note is only as good as the buyer's ability to run the company and pay. Interest adds to what you receive, sometimes meaningfully, but you are now a lender. Security for the note, such as a lien on assets or a personal guarantee, and your rights if payments stop, belong in the documents your transaction attorney prepares. Our business financing page covers the common structures.

Rank what matters to you before offers arrive

Score each item from one to five before you see a letter of intent. Your advisor can then steer the process toward buyers who fit.

• The headline price and the share paid in cash at closing.
• Speed and certainty of closing.
• The buyer's financial strength and experience.
• Confidentiality during the process.
• What happens to employees, the company name and its location.
• Your own role, and for how long, after closing.
• Fees, closing costs and the net amount after tax.

Two sellers, two right answers

Consider an owner facing a health problem who needs to be out quickly. Certainty and speed outrank the last dollar of price, so a well-financed buyer with a clean offer may be the right choice even if another bid is higher on paper. Now consider an owner whose priority is that the business stays in its town with its people. For her, a buyer committed to keeping the location and staff can be worth a lower number, and that commitment can be written into the agreement.

Neither owner is wrong. Each is choosing the structure that matches what the sale is for.

Compare offers on what you keep

Put every offer on the same basis: cash at closing, the present value of deferred payments discounted for their risk, the working capital target, escrow, and the after-tax result your CPA calculates. Our answer on comparing an all-cash offer with a higher offer that includes seller financing shows the method step by step.

How we structure it with you

MDR & Associates asks about your priorities in the first discovery meeting, then aims for several letters of intent at the same time so you can choose between structures, not just prices. We have a fiduciary duty to present every offer in person, and you decide whether to accept, reject or counter. We can arrange SBA, conventional and seller-financed structures and work alongside your attorney and CPA. To talk through what matters most to you, contact us.

Where this fitsBusiness valuation in Texas →

Questions owners ask next

Is a seller note risky?

It can be. You are relying on the buyer to run the company well enough to pay you. The risk is reduced by vetting the buyer's experience and finances, keeping the note a modest share of the price, and securing it properly. Your transaction attorney should draft the protections.

Can I insist on all cash at closing?

You can, and some buyers, often private equity groups or larger strategic acquirers, can pay that way. Expect fewer buyers able to meet the condition and, in many cases, a lower headline price. Whether the trade is worth it depends on how much certainty matters to you.