Selling your business? It’s not about your headline sale price, but what actually lands in your bank

You’ve spent years building your business and the headline offers look great.

But here’s the truth:

You don’t know how much you’ve sold your business for until the final payment hits your bank account.

Let’s break down why and how to avoid getting caught out.

1. The deal structure

Most deals are a mix of:

• Initial payment: A percentage of the overall deal paid on completion – no strings attached.
• Deferred consideration: The rest of the deal, usually paid over 1 – 5 years after completion -contingent on client retention, and possibly business targets being met.

A higher initial payment means less risk for you, but more risk for the buyer.

A lower initial payment but higher deferred consideration puts more risk on you.

If you’re confident in your clients sticking around and the buyer’s handover plan, you could get a higher overall deal, but you’re taking on more risk.

Also look out for:

• Cap and collar: Sets minimum/maximum on deferred payments.
• Market adjustment clauses: Removes market movement (up or down) from the deal.
• Upside sharing: Lets you benefit if AUM grows after the deal.

Make sure you understand the deal, what’s realistic, and structure it in a way that’s going to work for both you and the buyer.

2. Client retention makes or breaks your outcome

Almost every deal assumes one thing: your clients stick around.

Two big things affect that:

• Your timeline: Leave immediately, and client retention is in someone else’s hands. Stick around and help with the handover, and you can improve the odds.
• Proposition changes: Buyers almost always want to move clients to their proposition, because they know they can deliver it at scale and make money from it. If the buyer changes how clients are serviced or charged in the deferred consideration period, expect more to leave. You may be able to negotiate a “no-change” period into the deal to stop this.

3. Choosing the right buyer: Culture over cash

Big offer? Looks great on paper. But who’s behind it?

• Are they someone you trust?
• Do you get on with the people you’ll be working with?
• Is it a PE-backed buyer under pressure to deliver fast returns?
• Are they leveraged to the hilt, and what happens if interest rates shift?
• If it’s a small or local firm, do they have the money or funding in place?
• Do they do things wildly differently from you?

All should be investigated and considered.

Here’s a simple test:

Would you invest your own money with this buyer?

If not, why would you trust them with your team, clients, and legacy?

The wrong buyer might offer more up front, but the deal could create a lot of stress, provide a lower payout than expected, and leave you with a whole heap of regret.

Culture before cash, always!

Read more: Why accepting the highest bid for your business could be the most expensive mistake you make.

Start early. Sell better.

The sellers who walk away happiest start early, fix what’s broken, and go to market prepared.

At Melo, we work exclusively on the seller’s side. We’re in your corner every step of the way. And we don’t just run deals; we get businesses ready to sell before they go to market to maximise value.

The sooner you start planning, the better – and Team Melo can help

Read more: Thinking of selling your business in 3 years? You’re already behind

If you want to talk about getting your business sale ready, drop us an email at hello@melo.co.uk or call us on 0113 4656 111.