Deal structure, from headline to wire.
A price is a sentence with several clauses. Whether shares or assets change hands; which of the money is cash, deferred, contingent or paper; how the price is fixed against the balance sheet; what stands behind your warranties; and the tax line at the end. What each clause means, what the market actually does, and where the money moves.
- Price is what you are offered; structure is what you keep. Read every offer in five columns – certain, deferred, contingent, reinvested, at risk – before you read the headline.
- The formula that turns enterprise value into the wire – cash, debt, working capital, debt-like items – is negotiated with the price and often worth more than a turn of the multiple.
- An earn-out or a rollover makes part of your price depend on decisions the buyer takes after closing; negotiate them with the integration plan in view, before exclusivity.
Share deal or asset deal.
- Share deal.
The buyer acquires the company itself: every contract, employee, liability and history comes with it, known and unknown. It is the usual form for a technology company sale – contracts stay in place without consent unless they carry change-of-control clauses, employees stay employed by the same entity, and the seller walks away from the company rather than from a shell that still holds its liabilities. Because the buyer inherits the unknown, the buyer asks for warranties, indemnities and protection; most of the sale agreement is that negotiation. For a Swiss private individual, the gain on privately held shares is in principle tax-free, subject to exceptions described below.
- Asset deal.
The buyer acquires named assets and named liabilities – the code, the contracts, the brand, the people – and leaves the company, and everything not named, with the seller. Buyers like it when they fear what they cannot see; sellers usually do not: how contracts and employees move depends on the jurisdiction and the transaction mechanics – in Switzerland and much of Europe, contracts generally have to be assigned one by one and employees attached to the business transfer under statutory rules that carry information and often consultation duties, where US practice differs – and the proceeds land in the company and are taxed there before they reach the owner. In continental Europe it is uncommon for a going concern of this size, and a buyer proposing one should be able to say why.
How the money arrives, who carries the risk in between, and how often the market uses each.
| Form | What it is | Who bears the risk until it is paid | What the market does |
|---|---|---|---|
| Cash at closing | Paid on the day. Received now – though warranty and indemnity claims can still reach part of it afterwards. | Nobody. | The benchmark against which every other line is discounted. |
| Deferred consideration / vendor note | A fixed amount paid later, sometimes with interest. | You – on the buyer’s credit. Ask whether it is secured, and where it ranks against the buyer’s banks. | Common where the buyer is thinly capitalised; less common from strategics and large funds. |
| Earn-out | Additional price contingent on future performance the buyer will control. | You – on the plan, the definition and the buyer’s conduct. | In 24% of US private-company deals outside life sciences in 2025 and 23% of European deals in 2023; 59% pay anything, aggregate payouts about 21 cents per dollar of maximum opportunity, at least 28% contested; median period 24 months.1 |
| Rollover equity | Part of the price reinvested in the buyer or the acquisition vehicle. | You – as a minority investor in someone else’s plan, with their governance and their exit timing. | Common in private-equity platform deals; the class of equity and its place in the preference stack decide its worth. |
| Listed shares | The buyer’s own stock, usually with a lock-up. | You – on the buyer’s share price until the day you may sell. | Strategics with a liquid currency; ask about the lock-up before the price. |
| Retention and stay terms | Bonuses, pools and employment terms for you and your team. | The people receiving them – and you, if they are funded from the price. | Very common; a retention pool paid from purchase price is a price reduction under another name. |
| Escrow / holdback | Price retained against warranty claims, released on a timetable. | You – until release; claims are the buyer’s to make. | See below. In US private deals in 2025, 88% carried some escrow.2 |
The highest enterprise value is not a decision rule.
Illustrative. Two carry the same headline; all three can rationally be the best offer for a particular founder. Read the columns before the first one.
| Offer | Headline | Certain now | Contingent | Reinvested | At risk after closing | You | The bet you are making |
|---|---|---|---|---|---|---|---|
| A | €40M | €20M cash | €20M earn-out over three years, on revenue | – | Warranties unsecured – no escrow – and an earn-out the buyer can set off against | Stay three years as chief executive | That the plan survives the buyer’s control of pricing, hiring, product and cost allocation – and that the definitions hold |
| B | €37M | €35M cash | – | – | €2M escrow, eighteen months | Six-month transition, then out | Almost none. Liquidity and a clean separation, at a lower headline |
| C | €40M | €28M cash | – | €10M rollover into the acquisition vehicle | €2M escrow, plus the rollover itself | Stay three to five years, as an investor and an executive | That the buyer’s integration and leverage produce a second exit worth more than €10M – on governance you do not control |
None of the three uses fixed deferred consideration; where a buyer proposes it, it is a loan from you to them and belongs in the “at risk” column. Offer A pays most if its milestones are reachable, its definitions are robust and you want to run the business inside the buyer for three years; it pays least if any of those fails. Offer B is maximum certainty and a clean separation, and it is the right answer for the founder whose priority is exactly that. Offer C is a second investment: it can outperform both if the combined platform succeeds, and it ties €10M of nominal value to leverage, dilution, sponsor economics and an exit you do not time. An offer is also an offer about the future ownership of your company – which is why the comparison runs through integration as well as price. Chapter 7 →
Six decisions inside every earn-out clause. The headline is none of them.
- The metric.
Revenue, gross profit, EBITDA or a milestone. The further down the profit-and-loss account the metric sits, the more of it the buyer’s own decisions – cost allocations, hiring, pricing, integration charges – can move. In US data, most earn-outs now use more than one metric.1 A revenue metric measured on the seller’s products as defined at closing is the one a seller can most nearly control.
- The period.
The median is twenty-four months; almost none run beyond four years.1 Longer periods look generous and are often the opposite: they extend the time in which the buyer’s plan, not yours, decides the outcome.
- Targets, thresholds and acceleration.
A cliff (all or nothing at a threshold) or a sliding scale; a catch-up across periods if one year is missed and the next exceeded; and acceleration – full payment triggered if the buyer sells the business, abandons the plan, or ends your employment without cause. Acceleration is the clause that protects you from the buyer’s own change of mind.
- The conduct covenants.
What the buyer promises about how it will run the business during the period: keep it identifiable, fund the plan it bought, not divert customers or staff, not change accounting policies. Many earn-out disputes are, underneath, arguments about these covenants and about whether they were drafted at all.
- Information and disputes.
Monthly or quarterly reporting on the metric, the right to inspect the calculation, and a mechanism – usually an independent accountant as expert, on a fixed timetable – for settling disagreement without litigation. At least 28% of earn-outs are contested; the ones with a mechanism tend to be settled, the ones without tend to be fought.1
- Security and set-off.
Whether the payment is secured or guaranteed, and whether the buyer may set warranty claims off against it. An earn-out the buyer can set off against is not only contingent price: it is also the buyer’s escrow, funded by you.
And one question that sits above all six: what does the buyer intend to do with the business during the period? An earn-out tied to a standalone business and one tied to a company scheduled to disappear into the buyer are not the same instrument. If customers can be migrated, products discontinued, sales bundled and overheads allocated, the metric is measuring the integration, not your company. Integration and the earn-out, in chapter 7 →
Go deeper · earn-out drafting points an adviser and counsel will raise
Accounting basis fixed to the policies in force at closing; treatment of acquired or divested businesses and of intercompany sales; attribution rules for cross-sales and bundles; extraordinary items and currency; a standard of conduct (good faith, ordinary course, no actions with the primary purpose of reducing the payment) or, better, specific covenants; separate books for the measured business; quarterly statements with audit rights; a fixed dispute timetable with an independent accountant as expert; acceleration on change of control, on the buyer’s material breach of the covenants, and on your termination without cause; and whether disputed amounts sit in escrow while the expert decides.
Locked box or completion accounts: who owns the business between the balance sheet and the wire.
An enterprise value has to be turned into a payment, and the balance sheet moves every day. Two mechanisms do it. Under a locked box, the price is fixed on a historical balance sheet – the “locked-box date” – and the buyer takes the economic ownership of the business from that date; the seller promises that no value has leaked out to it since, other than agreed “permitted leakage”, and is often compensated for the delay with an interest-like ticker. Under completion accounts, a preliminary price is paid at closing and a final price is calculated afterwards from accounts drawn up at the closing date, comparing actual cash, debt and working capital to negotiated targets.3
The difference is control. A locked box gives the seller certainty and gives the buyer the diligence burden before signing; completion accounts give the buyer a second look after closing, on numbers the buyer then prepares. Europe and the United States have chosen differently: in 2023, 44% of European deals had a post-closing price adjustment and a majority of the rest used a locked box, while 94% of US deals adjusted the price after closing.4 In Switzerland the locked box is the more common mechanism outside financial services.5 Either way, the three definitions that matter – cash, debt and normal working capital – are settled in the sale agreement, and a working-capital peg set carelessly is a price adjustment the buyer collects after signing. The peg itself is usually set from a trailing twelve- or six-month average of the company’s working capital, with one-offs removed and seasonality read fairly; the argument is over what “normal” means.
Go deeper · the price mechanism, expert notes
The enterprise-to-equity bridge as a schedule, not a sentence; a net-debt definition with a hierarchy for items that are argued both ways (deferred revenue, accrued bonuses, transaction costs, leases, tax, customer advances); the working-capital reference period and seasonal adjustment; the accounting hierarchy (specific policies, then consistency with the accounts, then the applicable standard); a sample completion statement agreed before signing; a collar below which small differences are ignored; the timetable and the expert-determination process for disputes; under a locked box, the locked-box accounts, the permitted-leakage schedule, the ticker or value accrual, and whether a separate escrow secures leakage claims.
Escrow, holdback and warranty insurance – what stands behind your promises.
You will give warranties about the company. If one proves untrue, the buyer claims. The questions are how much of the price is exposed, for how long, and who pays: you, from an escrow, or an insurer. The market has answers.
The rest of the protection package is arithmetic you should know before it is proposed to you. A de minimis threshold below which single claims are ignored (in 70% of European deals); a basket the claims must exceed before anything is paid (64%, most set at or below 1% of price); a cap on total liability – in Europe about a third of deals cap it at a quarter of the price or less, and roughly half at more than half the price, where the United States caps below 10% in most deals; and a limitation period for claims, set between twelve and twenty-four months in about two-thirds of European deals, with tax and title warranties surviving far longer.4 Warranty insurance changes the negotiation: the seller’s exposure shrinks to a residual liability, often nominal; the insurer’s retention – a fraction of a percent of enterprise value – is allocated between the parties by negotiation; and the price of that certainty is a premium someone has to pay. In the European mid-market it is often the seller who proposes it.
Go deeper · indemnity architecture, expert notes
Fundamental warranties (title, capacity, authority) against general warranties, with different caps and survival; tax warranties and a tax covenant with their own period; de minimis and basket, and whether the basket is a deductible or tips; the cap as a share of price and what sits outside it (fraud, fundamentals, specific indemnities); knowledge qualifiers and whose knowledge; a materiality scrape for claims; the disclosure standard (“fair disclosure” and what is deemed disclosed); conduct-of-claims and mitigation; set-off rights against deferred or contingent consideration; and, with insurance, the retention, the exclusions (known matters, forward-looking statements, certain tax and pension items), the policy period, who pays the premium, and the insurer’s waiver of subrogation against the seller, save for fraud.
Tax is part of every transaction. The answer is jurisdiction-specific.
The treatment of a founder’s shares, of shares held through a holding company, of employee options, of a rollover, of an earn-out tied to employment and of an asset deal differ by country, sometimes in opposite directions. The one rule that travels: the tax outcome is largely determined by the structure, the letter of intent largely sets the structure, and it is far cheaper to have tax advice before that letter than after it. This chapter is a map of the questions, not tax advice; your adviser gives that, and should be in the room early.
Jurisdiction note · Swiss founder shares · last verified 2 September 2026
For a private individual resident in Switzerland selling shares held as private assets, the capital gain is in principle free of income tax.7 The principle has three well-known exceptions, each triggered by structure rather than by price: an indirect partial liquidation, where a stake of 20% or more is sold to a buyer holding it as a business asset and the company distributes pre-existing, non-operating substance within five years with the seller’s knowledge or cooperation; a transposition, where shares are transferred to a company the seller controls; and quasi-professional trading, where the frequency and financing of a person’s dealings make them a trader in the tax authority’s eyes.7 Separately, consideration that is really compensation – an earn-out tied to your continued employment, a payment for a non-compete – can be taxed as income rather than as gain.
The structure of an offer is negotiated with the price, in the same round, against the same competing offers – because a structural term left for the definitive agreement is negotiated after your alternatives have narrowed. Bring the term sheet; we will read it with you. Deal terms & structure, as we negotiate it →
1 SRS Acquiom, 2026 M&A Deal Terms Study (2,300+ US private-target acquisitions, 2020–2025): earn-outs in 24% of 2025 deals excluding life sciences; SRS Acquiom earn-out and claims data (2024): 59% of deals with an earn-out paid something, aggregate payouts about 21 cents per dollar of potential, contested at least 28% of the time, median period 24 months; SRS 2025 study: 68% of earn-out deals used more than one metric and no 2024 earn-out period exceeded four years. CMS, European M&A Study 2024 (559 deals in 2023): earn-outs in 23% of European deals. Aggregate ratios, US-weighted; a specific earn-out can pay in full or nothing.
2 SRS Acquiom, 2026 study: 88% of 2025 private-target deals had some escrow or holdback; median escrow 10.0% of transaction value without representations-and-warranties insurance, 2.8% with (all escrows combined); the 2024 study put the general-indemnity escrow at 10% and 0.5% respectively, with a median survival period of 12 months. US practice; European escrow medians are not published.
3 KPMG, Locked box and completion accounts (2023) and KPMG Luxembourg (January 2026): definitions of the two mechanisms, leakage, permitted leakage and the ticker.
4 CMS, European M&A Study 2024 (559 deals CMS advised on in 2023, 27+ jurisdictions): purchase-price adjustment in 44% of deals and a locked box in 56% of the remainder (US comparison 94% adjusting); W&I insurance 16% overall, 4% below €25 million, 38% at €25–100 million, 47% above €100 million; de minimis 70%; basket 64%, of which 60% at or below 1% of price; liability caps under 10% in 14%, 10–25% in 20%, 25–50% in 22%, over 50% in about half (US: 61% cap below 10%); limitation periods of 12–24 months in about two-thirds of deals; MAC clauses 10% (US 97%). One firm’s deals, one year; later editions report W&I rising and longer limitation periods, without open figures.
5 Homburger, Chambers Corporate M&A 2026 – Switzerland (April 2026); Bär & Karrer, Swiss M&A (3rd ed., 2022) cite roughly 60% of European transactions on a locked box – a different sample and definition from CMS, whose 2023 figures imply about a third. The surveys disagree; the mechanism is negotiated deal by deal.
6 Marsh, Transactional Risk Insurance 2024: Year in Review: continental European primary W&I rates of roughly 1.0–1.2% of the insured limit through 2024; UK average rate 1.1%, average retention 0.31% of enterprise value, average limit about 38% of enterprise value. Broker-placed policies, skewed to larger deals than €10–150 million.
7 Swiss Federal Act on Direct Federal Tax, Art. 16(3) (tax-free private capital gains) and Art. 20a(1) (indirect partial liquidation; transposition); Federal Tax Administration Circular No. 36 (2012) on quasi-professional securities trading and its safe-harbour criteria; cantonal practice and Vischer (2019) on earn-outs and non-compete payments as income. Federal rules; cantonal and communal practice, holding structures and non-Swiss sellers differ. Not tax advice.
Holding a term sheet? Read the structure before you answer the headline.
Thirty minutes with a partner: what the offer is actually made of, which terms move the money, and what we would negotiate first. Under NDA, no engagement attached.
Reading this with a live transaction in front of you? Ask a partner about deal structure → No engagement, and no need to name the company.