Two offers arrive for your company.

The first values it at €5 million, with almost all of the consideration paid at closing. The second reaches €5.5 million, but part of the price will only be paid if the business achieves certain results over the following two years. The buyer also wants the entrepreneur to remain involved and still needs to secure the financing required to complete the transaction.

Which is the better offer?

Looking at price alone, the answer seems obvious. Looking at the transaction as a whole, much less so.

When several buyers are interested in the same SME, comparing offers is not simply a matter of looking at how much each buyer is prepared to pay. What matters is how much of that price is certain, when it will be received, which conditions still need to be met and what commitments will remain with the entrepreneur after the sale.

Two offers with similar headline values can therefore lead to very different outcomes.

The price in the offer is only the starting point

The first step is to understand exactly what the figure in the offer represents.

An offer of €5 million does not necessarily mean that €5 million will reach the shareholders at closing. Net debt, cash, working capital and other adjustments can change the final amount.

This becomes even more important when several buyers are involved.

An apparently lower offer may include more favourable terms and ultimately result in higher proceeds for the seller. Conversely, a higher headline price may fall once all the agreed adjustments are applied.

Offers therefore need to be brought onto the same basis before deciding which one is financially more attractive.

€5 million today is not the same as €5 million that may be paid tomorrow

Even when the overall price is clear, the next question is when and under what conditions it will be paid.

Part of the consideration may be paid at closing, another part deferred and a further amount linked to the company’s future performance through an earn-out.

That difference matters.

One million euros paid at closing is secured. One million linked to EBITDA over the next two years depends on what happens after the sale.

At that point, it also becomes important to understand who will be making the decisions.

If the buyer controls investments, costs, organisation and commercial strategy, part of the entrepreneur’s sale proceeds may depend on results over which they now have limited influence.

The issue is not the earn-out itself. It is treating a potential payment as if it were already certain.

Selling the company and continuing to run it are not the same transaction

Different buyers may have very different expectations about the entrepreneur’s role after closing.

One may ask for a few months of support to manage the handover. Another may consider the founder’s involvement essential for the next two or three years.

For an entrepreneur who wants to remain part of the company’s next stage of development, the second proposal may be attractive. For someone who has decided to step away, it changes the meaning of the sale entirely.

The length of the commitment, operational responsibilities, decision-making authority, remuneration and any link to the earn-out are therefore as much a part of the offer as the price itself.

Selling the company for €5.5 million while being required to remain at the helm for three years is not the same as selling it for €5 million and completing the handover within a few months.

A high offer means little if the buyer cannot reach closing

There is another factor that is less visible than price but just as important: whether the buyer can actually complete the transaction.

An industrial group may already have approved the investment and have the funds available. Another buyer may submit a higher offer but still need to secure financing, obtain shareholder approval or satisfy other internal requirements.

On paper, the second offer is worth more. In practice, it carries greater uncertainty.

The quality of an offer therefore also depends on how many conditions remain outstanding and how likely the buyer is to deliver on what has been proposed.

This becomes particularly important when exclusivity is requested. Once discussions with other interested parties are suspended, the seller’s negotiating position changes.

Choosing the wrong buyer can mean losing months and eventually having to return to the market after the other potential buyers have moved on.

What remains at risk after closing also matters

Signing the deal does not necessarily bring every financial relationship between buyer and seller to an end.

The buyer may require warranties covering tax, contractual, financial or operational matters and may also ask for part of the consideration to be held back temporarily against potential future claims.

Here too, two apparently similar offers can be very different.

A slightly lower proposal with clearly defined warranties and almost all of the consideration available at closing may be more attractive than a higher offer where a significant amount remains exposed for several years.

The right comparison therefore looks not only at how much is being offered, but also at how much ultimately remains with the seller.

The best buyer is not necessarily the one with the highest number

When several offers are on the table, competition between buyers can improve the terms of the sale. But that only works if the proposals are compared on a consistent basis.

Price, cash paid at closing, variable consideration, warranties, the entrepreneur’s future involvement, conditions to closing and the buyer’s financial capacity all need to be considered together.

This is where an apparently simple difference between €5 million and €5.5 million can take on a very different meaning.

The buyer offering the highest number on the first page may not be the one that ultimately delivers the greatest value to the seller.

Conclusion

Receiving several offers is one of the strongest positions an entrepreneur can be in when selling a company. It creates alternatives and, with them, greater negotiating leverage.

That is precisely why reducing the decision to a ranking of headline prices would be a mistake.

An offer needs to be assessed based on what will actually be received, how certain the transaction is and what obligations will continue after closing.

The highest price will naturally attract attention. The best offer is the one that, once conditions, uncertainty and ongoing commitments are taken into account, delivers the best overall outcome for the entrepreneur.

FAQ

How should two offers to acquire a company be compared?

Offers should be compared by looking at the amount ultimately payable to shareholders, the consideration paid at closing, any deferred payments or earn-outs, the warranties requested, the entrepreneur’s future role and the conditions that must be satisfied before the transaction can complete.

Is the highest offer always the best one?

No. A higher offer may include a significant amount of contingent consideration, broader warranties or conditions that make closing less certain. The headline price should always be considered together with the overall transaction structure.

What is an earn-out when selling a company?

An earn-out is part of the purchase price that is paid after closing only if the company achieves agreed results. Before accepting one, the seller should clearly understand the targets, timeframe, calculation method and who will control the decisions affecting those results after the sale.

What should be checked before granting exclusivity to a buyer?

Before granting exclusivity, the main economic terms should be sufficiently clear, the buyer’s ability to finance the transaction should be assessed and the seller should understand which elements could still change during due diligence.

Does the entrepreneur have to remain with the company after the sale?

Not necessarily. It depends on the buyer, the company and the structure of the transaction. The entrepreneur may remain only for a short handover period or continue for longer. Timing, responsibilities and decision-making authority should be agreed before choosing between competing offers.