How to evaluate an offer to buy your business, beyond the price

To evaluate a business acquisition offer, compare it on three things: what you take home after escrows, adjustments, and taxes; how likely the deal is to close; and what you still owe after closing. The headline price tells you little about any of them. Put every offer in the same table before you answer.

An offer arrives with a number on it, and the number is bigger than you expected, or smaller. Either way, the number is the least complete part of the offer. Two offers at the same price can leave you with different amounts and carry different risk once the terms are read.

What will you actually take home?

Less than the headline price, by the amounts that are held back, adjusted, deferred, or taxed. SRS Acquiom, which acts as paying and escrow agent on private deals, publishes what it sees in deals with upfront values of $50 million or less. For deals closed in 2025:

Here is an illustration, not a client. Two buyers each offer $10 million. Buyer A pays $10 million at closing, with $1 million of it held in escrow for 15 months. Buyer B pays $8 million at closing and $2 million as an earn-out. At closing, A puts $9 million in your account and B $8 million. A's last $1 million depends on there being no claims, and B's $2 million depends on results you may not control. In SRS Acquiom's data, sellers who earned anything on an earn-out received a median of 43 cents on each earn-out dollar in lower middle-market deals.

Three other items change your proceeds and often get less attention. A debt-free, cash-free offer means you pay off the company's debt from the price and keep its cash balance only if the terms say so. A seller note means you are paid over time, and you become a lender to the buyer. Rollover equity means you keep a share of the company, which pays out, if at all, when the buyer later sells it. Taxes and your professional fees come out of all of it, and the structure of the deal changes the tax (asset sale or stock sale explains how).

How likely is the deal to close?

Ask how the buyer will pay, what has to happen before it can, and how long you are committed. A price you cannot count on is worth less than it reads.

• Payment: cash, a lender, an investment fund, or payments over time. If there is a lender, ask for its name and where the application stands (how to qualify an M&A buyer lists what to ask).
• Conditions: financing, due diligence, approvals, and anything else the buyer can use to step back.
• Exclusivity: how many days you cannot talk to other buyers, and what the buyer commits to in exchange (what happens after you accept a letter of intent).
• Decision-makers: who has to approve the purchase, and whether they have seen your summary.

If you have more than one offer, the comparison is easier, because each one shows what the others leave out.

What will you still owe after closing?

The purchase agreement keeps you responsible for what you said about the business, for a set period. Read these terms line by line and put a dollar figure on each one:

• Representations and warranties: your statements about the financials, contracts, taxes, employees, and disputes. If one is wrong, the buyer can make a claim.
• Limits on claims: a cap on total claims, a basket (a threshold below which claims do not count), and the survival period.
• Reps and warranties insurance (RWI): a policy that covers certain losses from inaccurate statements about the business, in place of or in addition to an escrow funded from your proceeds. It was used in 21% of 2025 deals of up to $25 million upfront and 40% of deals from $25 million to $50 million.
• Restrictions on you: a non-compete, a non-solicit, and a confidentiality duty, each with a length and a territory.

What happens to you and your team?

If you stay, the offer should say in what role, for how long, with what pay, and who you report to. If you leave, it should say what you are asked to hand over and for how long you are available. For key employees, ask whether the buyer plans retention payments or new contracts, because a team that leaves after closing is the buyer's risk and, if you have an earn-out, yours.

Which terms are worth negotiating?

Start with the terms that move the most money: the share paid at closing, the size and length of the escrow, the earn-out measure if there is one, and the working capital target. Rank the terms by what each is worth to you after tax, and ask for changes in that order. If an earn-out is on the table, how to structure an earn-out covers the metric, the period, and the protections.

Walking away is right when the gap is in terms you cannot accept, such as too much of the price at risk, a lender approval you cannot verify, or an exclusivity period with no real commitment from the buyer, and not only in the price.

What to do next

1. Put every offer in one table with these rows: cash at closing, escrow and its length, deferred or contingent payments, working capital terms, conditions, exclusivity, what you owe after closing, and your role.
2. Work out your after-tax proceeds on each offer.
3. Mark every term that can reduce what you receive after closing.
4. Ask each buyer, in writing, how it will pay, with the lender's name if there is one.

If you want help with the comparison, our M&A advisory work covers valuation, deal structure, and the materials a buyer asks for. We prepare you for the negotiation with the numbers: we build the comparison table, model each structure after tax, and show what each term is worth. You negotiate and sign; we do not negotiate or sign for you.

Questions owners ask

Is a higher price always the better offer?

No. An offer with more cash at closing, a smaller escrow, and fewer conditions can leave you with more than a higher headline price that depends on an earn-out or a long holdback. Compare what you receive at closing, what you may receive later, and how likely each part is.

What does a working capital adjustment do?

It compares the working capital the business has at closing with a target in the agreement, and moves the price up or down by the difference. Agree on how the target is set and how it is calculated before you sign. A majority of lower middle-market deals with an adjustment hold a separate escrow for it, with a median size of 1.12% of transaction value.