On a typical Colorado owner-operated deal, three structural elements show up in almost every offer that isn't pure cash: seller financing, earn-outs, and rollover equity. Each one moves risk from buyer to seller in exchange for a higher headline price. Knowing what each one really costs — and when to accept it — is where sellers preserve real proceeds.
Seller financing (seller note)
What it is: You leave a portion of the purchase price behind as a loan to the buyer. Typical Colorado terms: 10%–25% of purchase price, 5%–7% interest, 3–7 year amortization, subordinated to bank/SBA debt.
What buyers get: Lower cash requirement at close, and a signal that the seller believes in the business post-close.
What sellers give up: The financed portion isn't in your account at close. If the business struggles, you're often second in line behind the bank.
Earn-outs
What it is: A portion of the price paid over 1–3 years, contingent on the business hitting specific revenue or EBITDA targets post-close.
What buyers get: Risk protection if performance drops, and — sometimes — a lever to keep the seller involved during transition.
What sellers give up: Control over how the earn-out target is measured. If the buyer changes the sales strategy, cuts marketing, or reallocates overhead, hitting your number gets harder — and you have limited recourse.
- Insist on earn-out metrics you can influence (revenue or gross margin), not ones the buyer controls (net earnings after their allocations).
- Cap the total earn-out at a specific number so a great year doesn't just re-price a bad structure.
- Get financial reporting and audit rights written into the agreement — not the LOI.
Rollover equity
What it is: You retain (or receive) a minority equity stake in the acquiring entity — typically 10%–30% — alongside your cash proceeds. Common in private-equity-backed deals.
What buyers get: Aligned incentives and a seasoned operator who has skin in the future outcome.
What sellers give up: Liquidity on that portion, and control over the future capital events that determine when (and whether) rollover equity converts to cash.
Rollover equity is often oversold as "a second bite of the apple." Sometimes it is. Often it's a way to make an aggressive headline price look real while shifting long-tail risk to the seller. Evaluate it on its own terms, not as an add-on to the cash.
The structure question to ask every buyer
"What percent of your headline price is guaranteed cash at close?" The answer separates real offers from ones dressed up to look real. On a well-negotiated Colorado deal, cash at close is typically 65%–85% of headline price for owner-operated businesses under $10M.
What to do next
Model each structural element into a total net-proceeds number before you accept anything. The net proceeds article walks through the full deduction stack.
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