One offer may quote enterprise value and another may describe an amount for the shares. Establish the treatment of cash, debt, working capital and any retained assets before comparing the headline figures. Identify any assumptions that remain open.
Separate cash today from conditional payments.
Cash at completion, fixed deferred consideration and an earn-out are different economic components. An earn-out may depend on performance, continued involvement or other conditions. A higher headline total may therefore involve more uncertainty or a longer wait.
Illustration: two very different proposals.
Offer A comprises £800,000 at completion and £200,000 of fixed deferred consideration. Offer B comprises £700,000 at completion and up to £500,000 contingent on future performance. Their headline totals are £1 million and up to £1.2 million, but Offer B does not provide £1.2 million of guaranteed cash. Credit risk, timing, conditions and tax require separate consideration.
Questions to resolve before progressing.
Ask which figures the offer relies on, what adjustments remain, how a normal working-capital level will be established and whether funding is committed. Discuss the reporting measures behind any earn-out and the effect of management decisions after completion.
Keep adviser responsibilities clear.
The review supports the financial comparison and identifies questions for negotiation. Your solicitor should advise on enforceability, warranties, indemnities, restrictive covenants and contract drafting. Tax outcomes require advice for the relevant structure and circumstances.
Build an offer comparison you can update
Use one schedule for each proposal and record the source of every assumption. Leave an item marked unresolved rather than treating an indicative figure as agreed cash.
Price basis: enterprise value or equity value; identify included entities and assets.
Completion adjustments: cash, debt, debt-like items and the working-capital mechanism.
Payment schedule: cash on completion, fixed later payments and contingent amounts separately.
Conditions: funding, due diligence, exclusivity and continued owner involvement.
Personal proceeds: show transaction costs and separately advised tax assumptions.
Compare a base case and a downside case for conditional payments. Your solicitor should assess contractual protections and enforceability.
Questions about this scope
Should an earn-out be counted at its maximum value?
Show the maximum separately from scenarios based on the conditions. It is not guaranteed cash; timing, performance definitions and the buyer’s control of future decisions matter.
Can two identical headline offers produce different proceeds?
Yes. Adjustments, payment timing, conditions, costs and tax can differ. A consistent comparison helps make those differences visible.
BEFORE YOU COMMISSION
A few useful answers.
Can you tell me whether to accept an offer?+
We can discuss financial assumptions, alternative scenarios and the implications of different terms within an agreed scope. The decision also depends on your objectives, legal advice, tax position and appetite for risk.
Is a non-binding offer the final sale price?+
No. Due diligence findings, funding, negotiations and the final contract may change both the price and payment terms.
Prepare for buyer questions with a practical evidence plan covering earnings, customer relationships, owner dependence, working capital and decision ownership.