Purchase Price ≠ Purchase Price

A high purchase price sounds attractive at first glance – but what really matters is not the headline figure, it’s what actually ends up in your pocket. In practice, many offers consist of multiple components: fixed price, earn-out, price adjustments, indemnities, escrow amounts. After a detailed analysis, an offer that looks appealing can quickly lose value. Earn-outs in particular carry risks – especially when the seller has no influence over the business after closing.

An earn-out can be motivating if both parties’ interests are well aligned. But if the seller has no control, the incentive quickly turns into frustration. Price adjustment clauses – for example, related to working capital or net debt levels – can also significantly change the effective purchase price. It’s not uncommon for the actual final proceeds to be far below the communicated purchase price.

An experienced advisor helps to dissect the structure of an offer and identify pitfalls. They ask the right questions: What is guaranteed? What is conditional? What is negotiable? Because in the end, it’s not the nominal price that counts – it’s the realized value. And that depends largely on the structure of the deal.