Deal Structures & Consideration
6 articles
Earn-Out
Part of the consideration is contingent on future performance, aligning seller and buyer interests. In recruitment, earnouts often run 13 years and are based on…
Deferred Consideration
A fixed sum payable after completion (say, 12 or 24 months) regardless of performance, often used to bridge valuation gaps or smooth cashflow for the buyer. Unl…
Completion Accounts vs Locked Box
Completionaccounts deals finalise price postclose once an agreed balance sheet is produced; lockedbox deals fix the price based on a preagreed balance sheet dat…
Escrow & Retentions
A portion of consideration is withheld in an escrow account (or retained by the buyer) to cover potential warranty claims. Escrow typically ranges 1020 % of con…
Vendor Loan Notes
Unsecured or subordinated debt issued by the buyer to the seller in lieu of cash at completion. Loan notes attract fixed interest and are repayable over an agre…
Roll-Over Equity
Sellers may be asked to "roll over" a minority stake (commonly 1030 %) into the acquisition vehicle, aligning interests for a future exit. Rollover can boost ov…