Insights / Guide
Deal structure: what your offer is really worth
In short
The multiple is the number everyone quotes, but it rarely tells you what you'll receive. An offer is a mix of cash at closing, deferred payments, earn-outs and sometimes equity, and a lower multiple can be the better offer. Here's what each part is, why buyers use it, and a tool to see what an offer is really worth.
Read past the headline
Business
Founder sells software firm for 12x revenue
The honest version4x at closing. The rest was an earn-out we never hit.
Thrilled to share we just sold the company for 20x 🚀🎉
♥ 1,204 · 187 comments
The honest versionAfter our funding rounds, I owned 15% of it. Most of the upfront money goes to the investors. I only see mine if we hit the targets.
Tech deals
Bootstrapped SaaS acquired at a 9x multiple
The honest versionMostly paid in the buyer's shares. We'll see what they're worth.
Record 15x exit for local tech start-up
The honest versionHalf of it comes over three years, if I stay.
Founders hear about deals through their headlines, and the multiple becomes the number to beat. So the question they bring to a sale is often: how do I improve my multiple?
It's the wrong question to start with. The better one is: what is this offer worth to me? How much am I sure to receive, when, and what does the rest depend on? Two offers with very different multiples can come out close, and the one with the lower multiple is sometimes the better deal.
The four parts of an offer
The headline price is rarely paid in one go. Part of it is guaranteed, part of it depends on what happens after the sale, and that part may never arrive.
Why buyers structure offers the way they do
Every part of an offer is there for a reason. Understanding the reason is what tells you what can move.
Cash at closing
What you get today
Paid the day the deal completes.
Why: the more risk in a deal, the less of the price sits here.
Deferred payment
Fixed, paid later
Set amounts on agreed dates.
Why: to spread the buyer's payments.
Earn-out
Sharing part of the risk
Paid later, only if agreed targets are met.
Why: the buyer pays for performance it can't yet be sure of.
Equity
A bet on what comes next
Shares in the buyer or the new company.
Why: you share in the buyer's plan, up or down.
Most sellers would rather have everything in cash at closing. Most buyers would rather push as much as they can into conditional payments. But there's usually more behind an offer's structure than that tug of war. Some offers really are lowballs, but most structures have a reason behind them. Understanding it is what gets you to the best deal, or gets a deal done at all, because it tells you what can move, and what can't. A structure usually depends on:
- How much risk the business carries: client concentration, churn, growth that isn't proven yet. The more risk, the more of the price any buyer ties to what happens next.
- How much the business depends on you, or whether the deal was built on you staying.
- How far apart you and the buyer are on the future. If you value it more than they do, an earn-out bridges the gap.
- What constraints the buyer has, like limits on how much capital it can deploy at once.
No structure is good or bad on its own. If an all-cash offer gets you to your number, take it. Otherwise, start with what's guaranteed: is it an amount you'd be happy with if nothing else were ever paid? Everything else is worth less than its face value, because money later is worth less than money today, and an earn-out or shares may pay less than promised, or nothing at all.
Earn-outs, deferred payments and equity
Earn-out
Part of the price, paid only if the business hits agreed performance targets, usually over the next one to two years.
For the buyer, it's mainly a way to de-risk the deal, but it's also a way to test your projections: if you're confident in them, you should be able to hit them. For you, it's a way to put your money where your mouth is. And if you're bullish about the next two years, it can push the total value of the deal up.
It's also common when there's a specific risk, like customer concentration. If one client makes up 20% of revenue and you're sure they're staying, part of the price can depend on that client still being there in two years.
The catch: once the buyer runs the business, you no longer control everything that drives the targets.
Do earn-outs get paid?
Across US private deals, sellers have received about 21 cents for every dollar of maximum earn-out. In deals of $50m or less upfront, those with some payout received a median of 43 cents on the dollar.
Source: SRS Acquiom, 2026 earnouts study
Those numbers are a fair warning, but they're an average across very different deals. An earn-out set on realistic projections, with clear terms on how it's measured, stands a very good chance of being met. One set on a stretch plan, or worded loosely, often isn't. That's why the terms behind an earn-out matter as much as its size.
Deferred payment
Fixed amounts, paid on agreed dates after closing, and not tied to performance.
Buyers typically use them to stagger what they pay when they can't deploy all their capital at once. That can let them offer a higher guaranteed amount than they could pay on day one.
Sometimes they're linked to conditions that have nothing to do with performance. If your involvement after the sale is critical, part of the price can be tied to you staying on for an agreed time, regardless of how the business performs. As long as you keep your side of the agreement, you're paid.
Equity
Lets you roll part of your shares into your business, or into the buyer's business. It's usually the riskiest part, and the one with the most potential upside: it can end up worth far more than today's price, or nothing at all if things go wrong. It's a bet on the future of the business, and the terms that come with it need negotiating very closely.
Putting it together: a case study
How these parts come together depends on what you want from the sale, on the buyer's circumstances, and on how much you believe in its plan. Here's how that played out in one sale.
Case study
4x or 7x?
A SaaS business with strong performance. Its founder was looking for a clean, full exit, and several offers came in. Two stood out.
01 · The offers
Offer A
4xmultiple
$20mheadline
$18mguaranteed
- 90% at closing, 10% earn-out
- An established buyer
- No need for the founder to stay on
Offer B Chosen
7xmultiple
$35mheadline
$12mguaranteed
- 34% at closing, 66% earn-out
- A less experienced buyer
- Founder stays three years
Offer B had more upside, and more risk: $35m on paper, but only $12m guaranteed, against $18m for Offer A.
02 · The founder's choice
The founder was tempted by Offer B's upside, but needed to hedge some of the risk.
03 · How we reshaped Offer B
The aim: bring Offer B's guaranteed part as close as possible to Offer A's. The buyer couldn't put more cash in at closing, which is why so much sat in the earn-out. So we converted part of the earn-out into a guaranteed deferred payment.
guaranteed in the final Offer B, up from $12m, against $18m for Offer A.
We also set earn-out targets the business could clearly reach. And at the founder's request, part of their stake rolled into the buyer, to share in the upside.
Insisting on everything upfront would have lost this offer. Understanding why so much of it sat in the earn-out is what let us turn it into the better deal for the founder.
Illustrative figures.
Nextoria's role was essential in helping me understand what was standard, what I should push back on, and how to find the right balance between risk and reward.
Ole T.Founder
What is your offer really worth?
Offer comparison
Illustrative. Expected value = guaranteed + earn-out × how likely it is to pay. It ignores tax, timing and fees, and isn't advice on any offer.
To work out what your business could be worth in the first place, try our valuation calculator.
Agreeing on price and structure is only the first part of getting a deal done. For how to improve your chances beyond the numbers, read Signing an LOI? What to watch out for and Why M&A deals fail, and how to make sure yours doesn't.
Questions founders ask
What is an earn-out in M&A?
Part of the sale price paid after closing, only if the business reaches agreed targets, usually over one to three years. It lets a buyer pay more for performance it can't yet be sure of, and shares that risk with the seller.
What's the difference between an earn-out and a deferred payment?
A deferred payment is a fixed amount paid on an agreed date: it's guaranteed. An earn-out is paid only if targets are met, so it may be paid in part, or not at all.
What is an equity rollover?
Keeping part of your stake, or swapping it for shares in the buyer or the new company, instead of taking it all in cash. You share in what happens next, up or down.
Is a higher multiple always the better offer?
No. Compare offers on what's guaranteed and what you can reasonably expect, not only on the headline. A lower multiple paid mostly at closing can be worth more than a higher one that depends on targets.
Thinking about an exit?
Let's talk about your business.
Ready to sell or still years away, the earlier we talk, the better.
Last updated October 2026 · Written by Aïda Aït-Ahmed, Co-Founder, Nextoria