You Have Two Offers. How Do You Choose?
- Cameron DuPree
- Aug 10
- 2 min read
A competitive process is supposed to produce this problem. When it does, most owners look first at the headline number, which is usually the least informative part of the offer.
Compare net proceeds, not purchase price
Two offers at the same price can put very different amounts in your account. Work through: how much is cash at closing, how much is a seller note and on what terms, how much is contingent on future performance through an earnout, how much sits in escrow and for how long, and how the deal is structured for tax purposes.
An asset sale and an equity sale at identical prices can differ meaningfully in after-tax proceeds. Run both past your CPA before you compare anything else.
Weigh certainty of closing
The highest offer that does not close is worth nothing. Assess: is the buyer's financing committed or merely anticipated? Have they closed acquisitions before? Is there a financing contingency, and how wide is it? What is their diligence list, and does it suggest a disciplined process or a fishing expedition?
A cash buyer at a slightly lower price with no financing contingency is frequently the better deal than a higher offer contingent on a loan that has not been underwritten.
Read the earnout carefully
An earnout transfers risk to you for a period after closing, during which the buyer controls the business. If an offer includes one, examine what metric it pays on, who controls that metric after closing, what happens if the buyer changes strategy or accounting, and whether you have any operational protections during the earnout period. Revenue-based earnouts are generally safer for sellers than profit-based ones, because there are fewer levers a new owner can pull.
Consider what happens to your people
This is not sentimentality, it is often decisive for founders and it is a legitimate criterion. A strategic acquirer consolidating operations and a private equity platform building a regional business will treat your team very differently. Ask directly about their plans for employees, leadership, and the location.
Then consider the terms nobody reads
Representations and warranties, indemnification caps and survival periods, non-compete scope and duration, transition service expectations, and working capital adjustments. These can move hundreds of thousands of dollars after closing, and they are where an experienced advisor and a good attorney earn their fees.
The best offer is the one with the highest risk-adjusted net proceeds that actually closes. That is rarely the biggest number on the page.
Comments