The foundations page covered the framework. This page is where the specific forms get unpacked. Each of the four forms of consideration has a tempo, a risk profile, and a structural fit — and the seller's job is to match the form to the actual situation, not to default to whatever the buyer's first offer proposes.
Maximum liquidity, zero exposure.
The all-cash clean-break structure is the simplest: total purchase price wired at close, no earn-out, no seller note, no rollover. The seller is done with the agency the moment the closing wire clears. The headline ceiling is structurally lower than layered deals — the buyer pays a premium for certainty too, and a clean-break-only structure typically clears in the 8–10× market band rather than the 10–12× competitive band a layered structure can reach.
The fit is unambiguous when:
- Burnout. The seller cannot sustain a multi-year transition. Earn-out is structural mismatch with the reason for selling.
- Health. Reactive transition driven by necessity. Peace of mind has real, weightable value.
- Family triggers (divorce, caregiving, relocation). Liquidity for a specific immediate purpose is the goal.
- Retirement with high-activity post-sale plans. The seller wants the money now to fund the next chapter; not interested in the upside of staying involved.
The negotiation discipline: get explicit on the certainty premium. A clean-break offer at 9× cash is structurally worth more than a layered 11× offer with 60% cash, 25% earn-out, 15% rollover — once realistic discount rates are applied to the deferred components.
The second bite of the apple.
Rollover equity is the structural mechanism for capturing multiple arbitrage. The seller takes 10–40% of total consideration in buyer-platform equity rather than cash. When the platform eventually exits — typically 3–7 years later — the rolled-over equity pays at the platform's exit multiple, which is structurally higher than the entry multiple. The math compounds.
A book bought at 9× as part of a platform-build strategy can exit at 13× when the platform sells. The seller who took 25% rollover captured the second-bite premium on a quarter of the original deal value — often a six-figure or seven-figure outcome at the eventual exit.
The protections that matter on rollover equity:
- Tag-along rights. If the platform majority sells, the seller participates in the same transaction on the same terms. Without tag-along, the majority can sell and leave minority stranded.
- Put options. A defined right to require the platform to buy back the equity at specified events or dates. The exit-optionality safety valve.
- Anti-dilution provisions. Protection against dilution from subsequent equity rounds at lower valuations.
- F-reorganization tax structure. The mechanism that defers tax on the rolled-over portion until the eventual platform exit.
- Information rights. Access to platform financials, board materials, and major-decision visibility appropriate to the rollover percentage.
Fixed schedule, NPV math.
Payments over time is deferred consideration with a fixed schedule — typically monthly or quarterly payments over 3–7 years, sometimes with a balloon payment at the end. Unlike earn-out, the payments are not contingent on performance; they are debt obligations of the buyer documented in a promissory note. Unlike rollover equity, they don't carry the buyer's equity volatility; they carry the buyer's credit risk.
The NPV math matters more here than anywhere else in the layer cake. A $1M payment in five years is not worth $1M today. Applying the seller's appropriate discount rate (which should reflect both time value of money and the credit risk of the specific buyer):
| Payment schedule | Nominal value | Present value at 8% discount |
|---|---|---|
| $200K/yr × 5 years | $1,000,000 | ~$799,000 |
| $300K/yr × 3 years + $400K balloon | $1,300,000 | ~$1,059,000 |
| $1M balloon at year 5 | $1,000,000 | ~$681,000 |
The structural takeaway: balloon-heavy schedules carry materially worse NPV than even-payment schedules at the same nominal total. Sellers comparing offers should always run the PV math, not just the headline math.
The ultimate risk transfer.
The as-earned structure — sometimes seen in distressed-asset transactions where the buyer cannot front meaningful cash — places virtually all payment risk on the seller. Consideration is paid only as the buyer earns from the acquired book. The seller is effectively financing the entire purchase and accepting that the buyer's performance determines whether any meaningful payment ever arrives.
The structure is right for very specific situations:
- Distressed agency. The book is genuinely impaired and no competitive buyer will pay meaningful cash. The choice is as-earned proceeds or zero proceeds.
- Internal "fold-in" to a key employee. The seller is largely transferring the agency for legacy reasons; the as-earned structure is a face-saving payment mechanism.
- Specific high-trust buyer. The seller has independent reason to be confident in the buyer's execution and is willing to accept the structure to preserve cultural continuity.
For most sellers most of the time, the as-earned structure is the wrong answer. The headline number is meaningless when realization is fully contingent on the buyer's performance.
The parent Explainer — Payment Structures & Capital Stack — frames the layer-cake. Foundations covers the framework; Seller-Financing Instruments covers the legal documents that secure deferred and as-earned consideration.