Selling Your Business = The Price Tag? Not Quite

When a business owner starts thinking about selling, the first question is almost always: “How much can I get for it?”That’s completely understandable. Price feels like the ultimate measure of how all those years of hard work are paying off.

But experienced buyers move past that question quickly. Their next thought is: “What’s behind the price?”

A Real-Life Example: Same Price, Two Very Different Deals

Picture this: the owner of an automotive supplier receives two offers. Both buyers are willing to pay €4 million for the company. But the structure of the deals couldn’t be more different.

In the first offer, the full amount is paid at closing—but the seller has to provide full warranties for three years, and 20% of the price is locked up in an escrow account.

In the second offer, half the purchase price is tied to future performance (an earn-out based on EBITDA targets). However, there are minimal warranties, no escrow, and the seller can step away from day-to-day operations just a couple of months after closing.

Same price on paper—completely different risk, cash flow, and commitment in reality.

There’s No “Fixed Price” in M&A

A business isn’t a savings account. In most deals, the so-called “final price” isn’t actually final until closing—and even then, it might change. That’s because most agreements include a mechanism to adjust the price based on closing financials.

Let’s say a tech company asks clients for upfront payments in the month before the sale. That spikes the cash balance—but it’s really revenue for services the buyer will have to deliver post-closing. Naturally, the buyer doesn’t want to pay for obligations they still have to fulfill, so the contract adjusts the price accordingly.

Earn-Outs: Incentive or Delayed Risk?

Here’s another scenario: A software company is being sold, and the buyer and seller agree that 30% of the price will be paid only if the company hits two goals in the first year—keeping its top 10 clients and exceeding €700,000 in EBITDA.

On paper, it’s a great incentive to keep the seller involved. In practice? It shifts some of the purchase price into the future, making it dependent on performance the seller may no longer control. The buyer is now running the company, and their decisions can impact whether those targets are met—sometimes creating tension.

Warranties: When the Buyer Can Claw Back the Price

A buyer doesn’t just hand over money—they want protection. Through warranties, indemnities, and reps, they aim to guard against hidden risks.

For example, imagine a foreign buyer acquiring a domestic retail chain. The agreement states there are no ongoing tax audits or labor disputes. But after the deal closes, a tax investigation kicks off over past invoicing practices, resulting in a fine. If the contract was properly drafted, the buyer may be entitled to recover part of the purchase price.

That’s why many deals include a holdback or escrow—often 10–15% of the price—held back for a set period in case something comes up.

What Really Shapes the Seller’s Negotiating Power?

It’s not just about the number on the table. The seller’s leverage depends on:

• how transparent and well-run the business is,
• whether the legal and financials are clean and in order,
• if there are key-person dependencies or ownership complications,
• and how easy it is for someone new to take over and keep things running smoothly.

Bottom Line: Price Is Just One Part of the Deal

Selling a business isn’t just about agreeing on a number. What really matters is how that price will be paid, under what conditions, and what risks are involved after the ink dries.

Sellers who treat the fine print as “just legal stuff” often learn the hard way—what looks like a high price on signing day can shrink significantly over the next few years.