Deals don’t fall apart because people can’t agree on price. They fall apart because they can’t agree on risk.
That’s where structures like seller financing and earnouts show up.
A simple way to think about structure
- Cash at close is certainty.
- Seller financing is shared risk with defined terms.
- Earnouts are shared risk with performance conditions (and therefore more complexity).
Seller financing can help a qualified buyer close. It can also drag you into a long breakup if the business underperforms or the buyer is undercapitalized.
Earnouts can bridge valuation gaps, but they require clean definitions and clean reporting.
What needs to be defined (non-negotiable)
- Metrics and definitions (what counts, what doesn’t)
- Reporting cadence and standards
- Control clarity (who decides what)
- A dispute path
Structure is not “creative.” It’s where risk lives.
What to do this week
- Decide what risk you will and will not carry post-close.
- Require clear reporting standards in any seller-financed scenario.
- Don’t accept vague earnout language. Define metrics like you’re writing software.