Accepting an Earnout

When accepting an offer you want to consider the possibilities and if the best offer includes an earnout, you want to take a few factors in to consideration.

You might have multiple LOI’s on the table and multiple offers including several all cash offers and some offers with an earnout.

Obviously the offer with the highest total value and the highest upfront cash is the best offer, but sometimes it is a toss-up.

Let’s compare two scenarios..

1) A high valuation but one is with a lower upfront.

2) A moderate valuation but higher upfront.

Let’s say you got one offer for $25m and another for $17m. Obviously the $25m offer looks like a no-brainer. But it’s not always the case.

Not all offers are apples and apples.

There are three factors.

Factor 1. Who is the buyer? Are they reliable? Do you mesh well together.

Factor 2. What are the particulars meaning how much is upfront and how much is seller financed and what are the terms of the seller financing.

Factor 3. How secure is the seller financing? Is it collateralized by anything? Can you get the assets back?

The upfront amount of the $17m might be much higher and the buyer might be a better party with deeper pockets.

This would especially be essential if you were holding on to a minority stake also.

If you negotiate for a small minority stake as well, you may also exceed what you would get paid with the $25m offer, but you might exceed $25m in total as well.

Plus your responsibilities might be diminished than the other offers which would be important.

You might think you can handle an acquisition on your own which you may be able to, but if we have opened your eyes to anything in the process through a blog post just imagine what we can help with by knowing your exact situation.

Email – acquisitions@jarbly.com

Phone – (800) 773-1523

Leader in Business Consulting with Expertise in Representing Sellers & Buyers on Deals

Jarbly is a leader in business consulting with expertise in helping with revamped strategies, enhancing valuation, positioning for an exit, and business and real estate sales.

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Phone: (800) 773-1523
Email: support@jarbly.com

About Jarbly

JARBLY’s focus is on business consulting with an emphasis on creating disruptive ventures and high quality boutique services to enhance a business’ valuation and lead to a high quality exit. As JARBLY has been heavily involved in the digital space including its own ventures for a decade with servicing hundreds of clients around the world, it is very well versed with understanding technical aspects of a deal including value proposition, product offerings, marketing, metrics, ROI, moats, and value-add initiatives. JARBLY has the expertise and knowledge on various businesses, industries, and deals and is very creative with structure to help increase valuation, or help guide you to a strategic exit. JARBLY has helped brands grow and also cultivates business related and real estate opportunities that are ripe for acquisitions, helping buyers and sellers get what they are seeking from a deal.

Whether it comes to growing your business, including acquiring businesses you want to understand the deal. We understand deals and where the maximal value in a transaction is. Our bread and butter is to provide a win for our clients including positioning your company for an eventual high quality exit. We have the unique and uncanny ability to bring high quality materials to the table and renewed strategies that consistently work. We help with financial enhancements, implementing systems, and prepping your business with materials including Prospectuses, Confidential Information Memorandums, and high quality Value Proposition Decks.

JARBLY looks forward to working with you to enhance your business profits nad valuation and help you on your next acquisition, exit, or real estate opportunity including both commercial and high end residential properties with high end service from a qualified team of passionate individuals that help you secure the deal. JARBLY LLC is part of Trend Realty in Sarasota, FL operating the Boca division as the JARBLY team.

Jaret will hop on a quick call with you to understand your and your business.

Text or call (800) 773-1523 and Jaret can arrange to have a brief consultation with you at your business location before embarking on a series of consulting calls or a full immersion.

Accepting an Earnout