You finally get the offer:
$5 million.
Sounds amazing, right? But here’s the part no one tells you:
You might walk away with way less than you think.
This is the silent trap of business exits — confusing Sale Price with Net to Seller.
The Deal Math Most Owners Miss
Here’s what’s coming out of that sale price before you ever see a dime:
- Taxes: Depending on how your deal is structured, capital gains, depreciation recapture, and even ordinary income tax can eat a large chunk.
- Debt Payoff: Any outstanding loans, credit lines, or leases? They’re coming out of your check.
- Working Capital Adjustments: Buyers usually want a certain amount of cash, inventory, or accounts receivable left in the business – and if it’s not there, they’ll adjust the price.
- Deal Structure: Earnouts, seller financing, and holdbacks mean you don’t get all the money upfront (and some of it you may never get).
A Quick Example
Let’s say you sell for $5M:
- Pay off debt: $500K
- Working capital shortfall: $200K
- Taxes & legal fees: $1.2M
- Holdback/earnout: $800K over 2 years (if targets are hit)
Net cash at close? Maybe $2.3M — and the rest is uncertain.
What To Do Now
- Work with an M&A advisor or exit expert early to model out your net, not just your gross.
- Know your walkaway number- not based on ego, but on facts.
- Clean up your debt and working capital now — the less baggage, the more you take home.
Small Win You Can Do Today
Open a spreadsheet. Create two columns:
- 💰 Sale Price
- ✂️ Deductions (debt, taxes, adjustments, fees)
Then write down your best guess numbers. The number at the bottom? That’s what actually funds your future.
Want help modeling your exit, before it’s too late?
Join the Exit Ready Circle — and get expert guidance to prep for the deal that funds your next chapter.
