When owners think about selling their business, the first question is almost always about valuation: “What is my company worth?” While valuation is critical, seasoned M&A professionals know that deal structure often matters just as much — and sometimes even more — in determining the ultimate success of a transaction.

Valuation vs. Structure: Understanding the Difference
Valuation defines the headline price for your business — often expressed as a multiple of revenue or EBITDA.
Deal Structure defines how and when you receive that value, whether through all-cash payments, earnouts, seller financing, equity rollovers, or other mechanisms.

Even with a strong valuation, the wrong structure can reduce certainty, delay payouts, or expose sellers to unnecessary risks.

Why Structure Matters for Sellers
1. Timing of Proceeds
An all-cash deal provides immediate liquidity but may come with a lower multiple. Earnouts or staged payments can increase the headline price but spread payments over years and link them to performance targets.

2. Risk Allocation
Deal terms often determine who carries risk after closing. Working capital adjustments, indemnities, and escrow holdbacks can materially affect net proceeds.

3. Tax Efficiency
How a deal is structured can significantly change tax exposure. Asset sales, stock sales, and rollover equity each have different implications for after-tax proceeds.

4. Alignment with Buyer Strategy
A buyer may pay more if the seller agrees to remain engaged post-closing, whether through consulting, transition support, or equity rollovers. Structure can be used to bridge valuation gaps and align incentives.

Real-World Impact
Consider two identical offers of $10 million:
Offer A: $10M all-cash at close.
Offer B: $12M headline valuation, but $6M upfront, $3M in an earnout, and $3M in equity rollover.
While Offer B looks better on paper, it involves more risk, delayed payments, and reliance on future performance. In many cases, Offer A may be the stronger deal for the seller, despite the lower headline price.

Preparing for the Right Deal
Sellers should evaluate potential deals not just on what they’re worth, but on how that value will be delivered. A seasoned M&A advisor ensures that structure works in your favor — protecting your downside while maximizing your upside.

Key Takeaway
Valuation grabs attention, but deal structure determines how much value a seller actually realizes. Sellers who focus only on multiples risk leaving money — and certainty — on the table. The best outcomes come from balancing both.