Transaction Insight and Market Perspective

Founders naturally focus on valuation. It is tangible, comparable, and easy to anchor on. But in many middle-market transactions, valuation is only the starting point—not the determinant—of long-term outcome.

Deal structure defines what a founder keeps, what they risk, and what they may ultimately earn. Equity rollovers, earn-outs, seller notes, and management incentive plans can materially alter the economics of a transaction, sometimes outweighing differences in headline price.

Equity rollovers, in particular, are often misunderstood. When structured properly and paired with the right partner, retained equity can provide founders with a meaningful “second bite of the apple,” allowing them to participate in future upside driven by professionalized operations, add-on acquisitions, and multiple expansion. When misunderstood or poorly aligned, however, rollover equity can introduce risk without commensurate reward.

Earn-outs deserve similar scrutiny. While they can bridge valuation gaps, they also introduce execution and alignment risk. Clear metrics, reasonable time horizons, and operational control are essential. Founders should evaluate earn-outs not as deferred purchase price, but as contingent investments in a new ownership structure.

Sophisticated founders assess offers holistically—evaluating not only price, but certainty of close, post-close risk, governance, and long-term upside. The best outcomes are achieved when structure is designed intentionally, not accepted passively.