{"id":3234,"date":"2022-10-07T02:40:08","date_gmt":"2022-10-07T02:40:08","guid":{"rendered":"https:\/\/jarbly.com\/enterprise\/?p=3234"},"modified":"2022-10-20T01:51:42","modified_gmt":"2022-10-20T01:51:42","slug":"accepting-an-earnout","status":"publish","type":"post","link":"https:\/\/jarbly.com\/enterprise\/accepting-an-earnout\/","title":{"rendered":"Accepting an Earnout"},"content":{"rendered":"<p class=\"p1\"><span class=\"s1\">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.<br \/>\n<\/span><\/p>\n<p class=\"p1\"><span class=\"s1\">You might have multiple LOI\u2019s on the table and multiple offers including several all cash offers and some offers with an earnout.<\/span><\/p>\n<p>Obviously the offer with the highest total value and the highest upfront cash is the best offer, but sometimes it is a toss-up.<\/p>\n<p class=\"p1\"><span class=\"s1\">Let\u2019s compare two scenarios..<\/span><\/p>\n<p class=\"p1\"><span class=\"s1\">1) A high valuation but one is with a lower upfront. <\/span><\/p>\n<p class=\"p1\"><span class=\"s1\">2) A moderate valuation but higher upfront. <\/span><\/p>\n<p class=\"p1\"><span class=\"s1\">Let\u2019s say you got one offer for $25m and another for $17m. Obviously the $25m offer looks like a no-brainer. But it\u2019s not always the case.<br \/>\n<\/span><\/p>\n<p class=\"p1\"><span class=\"s1\">Not all offers are apples and apples.<br \/>\n<\/span><\/p>\n<p class=\"p1\"><span class=\"s1\">There are three factors.<br \/>\n<\/span><\/p>\n<p class=\"p1\"><span class=\"s1\">Factor 1. Who is the buyer? Are they reliable? Do you mesh well together.<br \/>\n<\/span><\/p>\n<p class=\"p1\"><span class=\"s1\">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.<br \/>\n<\/span><\/p>\n<p class=\"p1\"><span class=\"s1\">Factor 3. How secure is the seller financing? Is it collateralized by anything? Can you get the assets back?\u00a0<\/span><\/p>\n<p class=\"p1\"><span class=\"s1\">The upfront amount of the $17m might be much higher and the buyer might be a better party with deeper pockets.<\/span><\/p>\n<p>This would especially be essential if you were holding on to a minority stake also.<\/p>\n<p>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.<\/p>\n<p><span class=\"s1\">Plus your responsibilities might be diminished than the other offers which would be important.<\/span><\/p>\n<p>&nbsp;<\/p>\n<p>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.<\/p>\n<p>Contact us on your next acquisition:<\/p>\n<p>Email &#8211; acquisitions@jarbly.com<\/p>\n<p>Phone &#8211; (800) 773-1523<\/p>\n","protected":false},"excerpt":{"rendered":"<p>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\u2019s on the table and multiple offers including several all cash offers and some offers with an earnout. Obviously the offer with the [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":3313,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[36,286],"tags":[360,364,365,363,361,362],"class_list":["post-3234","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-acquisitions","category-acquisitions-sell-side","tag-accepting-an-earnout","tag-better-offer-with-an-earnout-or-no","tag-earnout-types","tag-what-is-the-better-offer","tag-what-is-the-most-attractive-acquisition-deal","tag-who-do-i-sell-my-business-to"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v26.8 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Accepting an Earnout - JARBLY - Business Consulting Focusing on Business Brokering, Ventures and Commercial Real Estate<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/jarbly.com\/enterprise\/accepting-an-earnout\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Accepting an Earnout - JARBLY - Business Consulting Focusing on Business Brokering, Ventures and Commercial Real Estate\" \/>\n<meta property=\"og:description\" content=\"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. 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