Buyer Offers: Compare the Money You Can Rely On

Put every proposal on the same basis

Buyer proposals often use different definitions of price. One may quote a value for the operating business, another a sum for the shares, and a third an amount that includes money already sitting in the company. Comparing the largest figures without reconciling those definitions can produce a misleading result before negotiations have properly started.

Ask your adviser to translate each proposal into a common schedule. Show the business value, the treatment of cash and debt, the working-capital assumption and the resulting indicative shareholder proceeds. Record what remains subject to investigation. If a buyer cannot explain how its stated price becomes the amount paid to you, the offer is not yet sufficiently clear for a confident decision.

Separate cash from promises

Completion cash, fixed deferred payments and contingent earn-outs have different risk profiles. A deferred instalment may be contractually fixed but still depend in practice on the payer's financial strength. An earn-out can depend on both performance and detailed rules governing how performance is measured. Neither should be treated as equivalent to money received on completion.

Understand who controls the factors affecting an earn-out. A buyer may change pricing, allocate central costs, combine teams or redirect customers. These changes can affect the result used to calculate your payment. Ask your solicitor and financial adviser to examine definitions, information access, dispute procedures and any available protection before you attach full value to the possible maximum.

Test the buyer as carefully as the buyer tests you

An enthusiastic buyer is not necessarily a funded buyer. Ask what resources are available, whether borrowing is required and which approvals remain outstanding. Understand whether the person negotiating has authority to settle terms or must return to an investment committee, board or financing partner. A proposal can be sincere and still have a difficult path to completion.

Look at the buyer's acquisition experience and integration approach. Where appropriate, ask whether you can speak confidentially with a previous seller. Treat references as one part of the assessment rather than proof of future behaviour. The relevant question is whether the buyer's resources and decision process fit the transaction it is proposing, not whether its presentation is polished.

Make your future role part of the price discussion

A larger offer can be less attractive if it requires you to remain in a demanding role for longer than you want. Specify the expected handover period, duties, reporting relationship and practical authority. Understand whether your sale proceeds depend on continuing employment or performance. These issues are easier to discuss before the financial terms feel settled.

Consider the personal reality of working inside the buyer's organisation. You may be used to choosing priorities and making decisions without approval. Becoming accountable to a new owner can be a significant change, particularly where you remain responsible for targets but have less influence over resources. A role description should resolve those tensions rather than leave them to goodwill.

Use exclusivity deliberately

A buyer may request a period in which you stop discussions with others while it carries out detailed work. Before agreeing, examine the clarity of the proposal, evidence of funding and the planned timetable. Ask what the buyer needs to investigate, who will do it and when meaningful decisions will be made. An open-ended process can weaken your position.

Your solicitor should review proposed heads of terms and any exclusivity or confidentiality provisions before signature. Commercially, seek a timetable with identifiable responsibilities and review points. If progress stalls, find out whether the cause is a genuine issue, missing information or buyer indecision. Do not confuse the amount already spent on a process with a reason to accept deteriorating terms.

Choose using a downside case

Prepare a simple comparison showing what happens if every payment arrives, if only fixed payments arrive, and if completion cash is the only money you receive. Test those outcomes against your personal requirements. You may reasonably choose a more conditional offer, but the decision should reflect your capacity to carry risk rather than attachment to its headline number.

Keep employee intentions, brand plans and customer continuity alongside the financial comparison. Some priorities will be commercial preferences; others may need specialist drafting if they are central to proceeding. An experienced ExitPlanning.co.uk adviser can help you compare the proposals consistently, while legal and tax specialists confirm the implications of the actual terms. The objective is an informed choice, not a mechanical ranking by price.