If you’ve ever talked with someone who sold a business, you’ve probably heard stories about “deal terms”, things like earn-outs, seller notes, holdbacks, or performance payments. And if you’re like most owners, you might have thought, “That sounds complicated. Why can’t they just pay me and be done with it?”
I get it. Selling your company would be a lot simpler if buyers just wrote one big check and you walked away. Sometimes that happens, especially when the deal is small or the buyer has plenty of cash. But more often, especially as the deal size grows, the structure of how you get paid matters just as much as how much you get.
Let’s walk through the most common structures in plain language - no jargon, no accounting lectures - so you know what to expect when the time comes.
The simple deal everyone dreams of: all cash at closing
This is the cleanest version of a sale. You sign, the buyer wires funds, and you move on.
It’s every seller’s dream because it’s fast and final. There’s no lingering risk, no follow-up payments, and no long-term connection between you and the buyer.
The reality? It’s less common than most people think.
Lenders and buyers like to share risk. Unless your business is exceptionally strong, has clean books, and the buyer is well-capitalized, full cash deals can be hard to come by.
Still, this is the gold standard, and it’s the benchmark every other deal structure is compared against.
Seller financing: when you become the bank (in a small way)
Seller financing simply means that part of the purchase price is paid over time. The buyer makes a down payment and signs a promissory note for the remainder, paying you monthly (with interest) until it’s paid off.
Think of it like selling your house and carrying the mortgage for the buyer, but for a business instead of a home.
Why do buyers ask for this? Because it gives them breathing room with cash flow early on, and it shows you have confidence in the business continuing to perform.
Why do sellers agree to it? Because it can attract more buyers, increase your total sale price, and speed up the deal.
The important thing is that the terms are clear: the interest rate, the payment schedule, and what happens if a payment is missed.
Handled properly, with good legal documentation, seller financing can be a win-win. You earn interest, the buyer gets flexibility, and both parties share some faith in the future of the company.
Earn-outs: when part of your price depends on future performance
An earn-out is exactly what it sounds like: you earn part of your sale price over time, based on how the business performs after closing.
Buyers like earn-outs because they reduce risk, they pay more if the business continues to perform well. Sellers agree to them when there’s real growth potential or when the buyer needs reassurance that the success will continue.
Here’s an example:
You sell your business for $2 million, with $1.5 million paid at closing and another $500,000 if the business hits certain revenue or profit goals next year.
If those targets are met, you get the extra half-million. If they’re not, you don’t.
It can sound risky - and it is, a little - but it’s also a way to bridge valuation gaps. When you and the buyer see value differently, an earn-out can be the middle ground that gets the deal done.
The key to a fair earn-out is clarity: clear definitions, clear measurement, and clear timelines. The simpler the terms, the fewer the headaches later.
Holdbacks and escrows: the “just-in-case” fund
Sometimes, buyers set aside a small portion of the purchase price, maybe 5–10%, in a separate account called an escrow or holdback. It’s there to cover any surprises that might come up right after closing, like unrecorded liabilities or disputes.
If everything checks out after a few months, the money is released to you.
It’s not personal; it’s just part of managing risk. In most well-run deals, those funds are released without issue.
Why buyers use structured deals
To understand why these structures exist, it helps to see things from the buyer’s side for a moment.
They’re taking on debt, risk, and responsibility. They’re stepping into your shoes, sometimes using loans, investors, or personal savings to make it happen. Structured deals spread that risk.
The more confidence you can give them via clean books, strong systems, loyal customers, a good team, the more likely you’ll get the terms you want, like a higher cash percentage or shorter payment period.
In other words: preparation gives you leverage.
Why sellers agree to structured deals
You might be thinking, “That sounds like the buyer’s benefit, not mine.”
But here’s the reality: structured deals often bring more money and better buyers to the table.
When you’re flexible on terms, you open the door to qualified, serious buyers who might otherwise walk away. You can use structure to close the gap between your price and what the buyer can finance today.
I’ve seen sellers end up with 10–15% more overall value because they were willing to be creative, not reckless, but open-minded.
The secret is to balance risk and reward.
Choosing the right deal structure for you
Every deal is unique. Some sellers want a clean break and will accept a slightly lower price for it. Others don’t mind being involved for a bit longer if it means maximizing value.
Neither approach is right or wrong, it’s about what matters most to you.
When we discuss potential deal structures, I often ask two questions:
“What’s more important to you - speed of closing or total value?”
“How much ongoing involvement feels comfortable?”
Your answers shape the strategy.
If you want a quick, clean exit, we’ll prioritize cash buyers. If you’re open to some financing or a short transition, we can attract a broader pool of serious offers.
The point is: you get to choose.
Protecting yourself in the process
Flexibility doesn’t mean blind trust. Every term should be clearly written, legally sound, and reviewed by your attorney and CPA.
If you’re carrying a note or earn-out, make sure the agreement protects you, with clear payment terms, security, and consequences if the buyer defaults.
Good advisors structure deals that are fair, not fragile.
A story from the field
A few years ago, I worked with an owner who ran a specialty manufacturing company. The business was solid - consistent profits, loyal customers, a strong reputation - but the buyer needed financing help to make the deal work.
The seller agreed to carry 20% as a note for three years. The payments came in like clockwork, and she ended up earning an additional $90,000 in interest.
When she told me later, she laughed and said, “That was the best ‘retirement income’ I never planned on.”
That’s what happens when you treat deal structure not as a compromise, but as a tool.
The big picture
At the end of the day, deal structure is simply about risk and trust, how much each party is willing to share.
You’re selling more than numbers; you’re handing over a legacy. Buyers know that, and good ones want to make sure both sides feel secure.
The best deals aren’t about squeezing every dollar, they’re about creating a win-win that gets you to closing with peace of mind.
A final thought
When you sell your business, you have two goals: get paid fairly and get paid securely. Deal structure is what balances those two.
Don’t let unfamiliar terms intimidate you. With the right advisor, you’ll understand exactly how each option works and why it matters.
Every deal is a little different, but the best ones all have one thing in common: clarity.
When everything is clear, you don’t have to second-guess anything. You can focus on what really matters, finishing strong and starting your next chapter with confidence.