From Portland Business Brokers Group.
Turn the offer into a payment timeline
Separate cash at closing from a seller note, holdback or earnout. A headline amount can combine money you receive immediately with payments that depend on future events.
A seller note is money the buyer owes under agreed terms. An earnout usually links payment to specified performance. They create different questions about control and collection.
Read the terms behind the amount
- When is each payment due, and what can delay it?
- What security and priority support a note?
- Who measures performance for contingent payments?
- What information and remedies will you retain?
Ask counsel to explain the protections and their limits. An attractive interest rate does not remove the risk that the buyer cannot pay.
Compare net proceeds and your next role
Allow for debt repayment, costs and the tax analysis from your CPA. Keep personal cash needs separate from a buyer's preferred financing structure.
If payments depend on performance, ask how much influence you retain after leaving. Responsibility without control can be difficult to manage.
Check continuing filing obligations
Before closing local tax accounts, review any income or property interests you will retain. Have your CPA decide which filings continue under the actual structure.