Compare the same asset scope, then separate cash at closing from seller notes, earnouts and rollover equity. Evaluate funding, contingencies, closing adjustments and your continuing obligations alongside the price. The highest headline offer may not best meet your goals.
In this guide
Put every offer on the same basis
Create one schedule for included assets, property, inventory, working capital, assumed liabilities and retained assets. Resolve differences before ranking proposals. A buyer excluding the property is not making an equivalent offer to a buyer acquiring the whole package.
Identify whether a quoted enterprise value must be adjusted for debt, cash, working capital and expenses. Ask the buyer to walk through the calculation to the amount expected to reach the seller at closing.
Separate the forms of consideration
Cash at closing is different from a seller note, contingent earnout or retained equity. A note carries repayment and enforcement risk. An earnout depends on contractual definitions and future results. Rollover equity is an investment with its own rights, dilution risk and exit uncertainty.
Do not add the maximum earnout to cash and call the total guaranteed. Ask what must happen to earn it, who controls the relevant decisions and how disputes are resolved. For a seller note, understand collateral, priority, repayment schedule and interaction with senior financing.
An illustrative comparison
Offer A has a $2 million headline amount, including a $400,000 seller note and a $200,000 possible earnout. Before debt and closing deductions, its immediate cash component is $1.4 million.
Offer B has a $1.8 million all-cash headline amount before those deductions. It provides $400,000 more immediate cash than Offer A in this example, even though the headline price is lower. This does not make it automatically better: conditions, scope, tax treatment and other terms still need comparison.
The offer worksheet uses this same separation. It does not assign a probability to an earnout or a value to private equity. Those require analysis of the specific documents and counterparty.
Carry the comparison through the known deductions
Continue the illustrative offers above using the same business and property scope. Assume each has $500,000 of debt payoff, $100,000 of fees, a $50,000 escrow and a $15,000 negative closing adjustment. These are invented inputs, not a typical fee schedule or a tax estimate.
Scroll sideways to compare columns. You can also focus the table and use the arrow keys.
| Component | Offer A | Offer B |
|---|---|---|
| Headline consideration | $2,000,000 | $1,800,000 |
| Seller note included | $400,000 | $0 |
| Maximum earnout included | $200,000 | $0 |
| Immediate cash component | $1,400,000 | $1,800,000 |
| Debt, fees and escrow | -$650,000 | -$650,000 |
| Closing adjustment | -$15,000 | -$15,000 |
| Closing cash before tax reserve | $735,000 | $1,135,000 |
The $400,000 difference remains here because the deductions were assumed equal. If one offer requires a larger escrow, retains a different asset or uses a different working-capital definition, change those lines and explain why. Do not compare one buyer's cash before debt with another buyer's cash after debt.
Run each resulting structure past the tax adviser before labelling either amount spendable. The offer tool compares immediate cash components before these deductions; the proceeds tool allows the additional inputs. Neither tool ranks the legal or execution risks for you.
Evaluate the ability to close
Ask what financing and internal approvals remain, what evidence supports the buyer’s equity contribution and how their proposed schedule fits the required diligence. A deposit does not independently prove that the entire transaction can close.
Compare the scope of diligence, financing conditions, landlord or franchisor approvals and environmental requirements. Look for clear milestones and an explanation of what can change the price. Counsel should assess the enforceability and consequences of the actual wording.
Distinguish a defined condition from an unanswered question
A condition should identify what must happen and how the parties will determine whether it happened. Ask for the scope behind a phrase such as satisfactory diligence: which material reviews, documents, approvals and deadlines are proposed? Counsel should explain the rights created by the actual language. A short list of conditions is not inherently safer if its wording is broad.
Illustrative situation: Offer A requires third-party financing and an assignment of the existing lease. Offer B describes cash funding but leaves its equity source and property terms unexplained. It would be premature to label B certain simply because it contains the word cash. Request evidence and the missing terms, then revise the comparison.
Use a condition log showing the responsible party, evidence requested, anticipated timing and financial consequence if unresolved. Separate a buyer's lender approval from a landlord's consent and a seller's accounting task. Progress on one does not prove the others will be completed. Revisit the log before selecting an offer or extending exclusivity.
Count your obligations after closing
List training hours, consulting duties, noncompetition terms, guarantees, indemnities, escrows and any requirement to retain an investment. Clarify whether you can retire, move or pursue another business on your preferred schedule.
Your time and continuing financial exposure matter even when they do not appear in the headline price. A broad obligation to remain available can conflict with the purpose of your sale.
Write down why the preferred offer fits your exit
Use a short decision note: the owner's required closing liquidity, acceptable remaining investment risk, expected training commitment and the material conditions still open. Explain which proposal best meets those priorities and what evidence could reverse the choice. This makes the recommendation easier to assess than a single weighted score with unexplained inputs.
For example, a seller willing to train a manager for a defined period may accept a transition commitment that would be unsuitable for an owner relocating immediately. A property-retention structure creates ongoing landlord responsibilities even if the operating sale is complete. Evaluate those obligations as part of the exit, not as minor details after selecting a headline price.
Keep alternative offers and discussions within the restrictions of signed agreements. If the preferred deal changes materially, bring the revised facts to the advisers and review the economics again. Do not rely on an earlier comparison after new financing, escrow, rent or liability terms have changed what the seller would receive and retain.
Compare seller outcomes
- Immediate cash before and after known closing deductions.
- Deferred, contingent and retained-investment amounts shown separately.
- Tax scenarios prepared for the actual allocation and structure.
- Material conditions and a realistic path to satisfy them.
- Time, restrictions and liability after closing.
- Consequences if the transaction does not close.
Use your priorities to make the decision explicit. An owner needing immediate liquidity may weigh a proposal differently from an owner comfortable retaining investment risk. Ask the deal team to identify the assumptions that would change their recommendation.
This guide provides general education. Your documents, jurisdiction and circumstances determine the advice you need. Figures labelled illustrative are examples, not reported transactions or market benchmarks.