OnwardLearn · Selling · Step 8. Agree on the terms
Price and terms are not the same thing
The short version
- The price is how much. The terms are how and when you get paid, and what you give in return.
- A lower price with more cash at closing can be worth more to you than a higher price paid over years.
- Look at cash at closing, any note you carry, money held back, working capital and your role after the sale.
- Every term carries risk. Money paid later depends on the business doing well after you leave.
- Compare offers on what you actually keep, and when, not on the headline number.
Two offers, side by side
Here is an example. Two buyers each offer for the same business.
| Term
|
Offer A
|
Offer B
| | --- | --- | --- | |
Headline price
|
$1,500,000
|
$1,400,000
| |
Cash at closing
|
$1,050,000
|
$1,260,000
| |
Note you carry
|
$450,000 over 10 years, with no payments for the first several years
|
$140,000 over 5 years
| |
Your role after closing
|
12 months, full time
|
3 months, part time
|
Offer A is $100,000 higher. But Offer B pays $210,000 more at closing, pays the rest back faster and asks much less of your time. Many owners would take Offer B.
The terms to look at
- Cash at closing. The money you receive the day the sale closes.
- A note you carry, sometimes called seller financing. The buyer pays you part of the price over time, with interest. Lesson 8.4 covers the rules.
- Payments tied to future results, called an earnout. Not allowed when the buyer uses an SBA loan. Lesson 8.5 covers this.
- Money held back at closing to cover claims under the purchase agreement. Lesson 9.6 covers this.
- Working capital. How much cash, customer receivables and inventory must stay in the business at closing. A higher target means less for you.
- What is included. Equipment, vehicles, inventory and real estate.
- Your role after closing. How long, how much time and how you are paid for it.
- Your non-compete. How long and how far you agree not to compete.
- The structure. Selling the company or its assets. Lesson 8.6 covers the tax effect.
Money later is worth less, and carries risk
A dollar paid at closing is certain. A dollar paid over five years depends on the buyer running the business well after you leave. If the business struggles, those payments may slow or stop.
That is why a higher price with much of it paid later is not always the better offer.
Common in larger sales too
Terms beyond cash matter in sales of every size. In Pepperdine's 2026 survey, investment bankers reported that seller financing appeared in 54 percent of the deals they closed. Those were mostly larger sales, but the lesson is the same.
Take this to your own people
The questions for this topic, for your attorney, your accountant or your lender.
- For your accountant: "Comparing these offers, what would I keep from each, and when, after taxes?" Listen for: a side-by-side of cash at closing, later payments and taxes, not just the headline price.
- For your M&A attorney: "Which terms in each offer carry the most risk for me?" Listen for: specific terms, such as a long note or a large holdback, and how to reduce that risk.
This names the question. Your CPA, your M&A attorney and your lender answer it for your situation.
Figures from Pepperdine Private Capital Markets Report, 2026. Benchmarks describe what happened in other sales. They do not predict yours.
When you’re ready
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