Why Deal Structure Matters Just as Much as Valuation

Welcome back to the Mid Market Insider!

Today, we’re diving into the ins and outs of deal structure and why it’s more valuable than the actual valuation of your business.

Before we dive in…👇

After nearly 20 years in M&A, one thing has stood out:

It’s common for business owners to think selling their business is all about the price.

The structure behind the deal determines how much you actually walk away with, how much risk you keep, and how smooth the transition will be.

Two deals with the same headline number can lead to completely different outcomes depending on the structure.

Asset Sale or Stock Sale?

This decision shapes taxes, liabilities, and how clean the transaction is.

Buyers often prefer asset sales.

Sellers may benefit more from stock sales.

It’s critical to know the difference before you negotiate.

Earn-outs, Holdbacks & Seller Notes

These are the parts of a deal that surprise owners the most.

• Earn-outs: Future performance determines your payout.

• Holdbacks: A portion of your cash sits in reserve.

• Seller notes: You become the lender for part of your own sale.

None of these is inherently bad, but they change the risk and timing of cash flow.

Why This Matters

Buyers can immediately tell if an owner understands deal mechanics.

Prepared owners negotiate better terms, shorten diligence, and reduce surprises.

Unprepared owners often agree to things they don’t fully understand — and regret it later.

You don’t need to become an M&A expert.

But you do need to understand the basic components of a deal before an offer lands.

Selling well starts long before a buyer shows up.

Knowing how deals are structured gives you clarity, confidence, and control, and ultimately makes your business more sellable.

That’s all for today’s newsletter! Thanks for reading!

📅 Next Week:

Next week, I’ll be getting into the importance of diversifying revenue streams in any business, why it matters to buyers, and how to do it practically.

Keep building,
Nick