The consideration stack

Purchase price is a stack of layers with different certainty and different timing.

The idea

Purchase price is a stack of layers with different certainty and different timing.

Price is shorthand for a stack: cash at close, escrow, a seller note, an earn-out, rollover equity. Each layer arrives at a different time with a different probability.

Structure negotiations are about the shape of the stack. Sellers should know which layers they will accept before the first letter of intent (LOI) arrives.

You sell once. They buy for a living.

Every sale of a founder-led business is a negotiation between a first-timer and a professional. Each chapter of the playbook closes part of that gap.

Read the asymmetry

The figure

Five layers, most certain first

Layer	When you receive it	Certainty	Who controls it
Cash at close	Closing day	Highest	Nobody, once it is wired
Escrow or holdback	12 to 24 months	High, less any claims	The buyer’s indemnity claims
Seller note	3 to 7 years	Medium; behind the lenders	The buyer’s ability to pay
Earn-out	1 to 3 years, if the targets are hit	Low to medium	The buyer’s operation of the business
Rollover equity	At the buyer’s next exit, 3 to 7 years	Lowest, with the highest upside	The buyer, entirely

Everything above cash at close is a bet on the buyer. Size the bet deliberately.

How to read it

A stacked bar showing the layers of a purchase price from most certain (cash at close, at the bottom) to least certain (rollover equity, at the top). Each layer arrives later and depends more on the buyer than the one below it.

The three P’s