It’s the most common mistake in M&A: a business owner gets an offer with a massive headline number, and they stop listening to everything else. They start planning their retirement based on that “sticker price,” only to be devastated months later when the actual check that clears the bank is 30% or 40% lower.
In the world of selling a business, there is a golden rule: It’s not about how much you get; it’s about how much you keep. Fixating on price while ignoring structure, taxes, and the likelihood of closing is a recipe for a failed exit.
1. The Tax Bite: Asset vs. Stock
As we’ve discussed in our breakdown of sale structures, the way your deal is built determines your tax bill.
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The Illusion: A $10 million Asset Sale might look better than a $9 million Stock Sale.
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The Reality: After accounting for double taxation (if you’re a C-Corp) and “depreciation recapture” (taxed at ordinary income rates), that $10 million offer could actually leave you with less cash in your pocket than the $9 million Stock Sale taxed at capital gains rates.
The Fix: Never sign an LOI (Letter of Intent) without having your CPA or broker run a “Net Proceeds Analysis.”
2. Deal Structure: Cash vs. “Hope Money”
Not all dollars are created equal. A high price that is heavily weighted toward “contingent payments” is often just an illusion of value.
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Earn-outs: This is money you only get if the business hits future targets after you’ve handed over control.
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Seller Notes: This is essentially you acting as the bank. If the buyer fails, you might never see that money.
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The Risk: A $5M all-cash offer is almost always superior to a $7M offer that is 50% earn-out. Why? Because the $5M is guaranteed, while the $7M is subject to the buyer’s ability to run your business successfully.
3. Net Working Capital (NWC): The Hidden Discount
Buyers expect the business to come with a “normal” level of working capital (inventory, accounts receivable, prepaid expenses).
If you haven’t negotiated the “NWC Target” correctly, the buyer can argue at the 11th hour that you left the “tank empty.” They will then subtract that amount dollar-for-dollar from your purchase price. This is a classic way for a buyer to offer a high price upfront and claw it back right before closing.
4. Likelihood of Closing: The “Certainty” Premium
A high price from a buyer who can’t close is worth exactly zero.
Some buyers (often inexperienced individuals or “search funds”) will overbid to get you under contract, only to spent the next 90 days trying to find the financing or looking for reasons to “re-trade” the price down.
What to look for instead:
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Proof of Funds: Can they actually write the check?
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Experience: Have they closed similar deals in Central Florida?
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Strategic Rationale: As we’ve noted before, a strategic buyer with a clear reason for buying is much more likely to cross the finish line than a “bottom fisher.”
The Bottom Line
Price is a vanity metric; Net Proceeds is a sanity metric.
When you work with a professional like Michael Shea, our job is to help you see past the headline number. We evaluate the legal and tax risks, negotiate the working capital pegs, and vet the buyers to ensure that the number you see on the LOI is the number that actually ends up in your bank account.