Deal Structure Explorer
Price the Structure
The discount rate is your own opportunity cost: what deferred money would have to earn elsewhere to be worth waiting for. A higher rate marks the note down harder.
Cash at Close
$2,400,000
The cash slice of the price, before commission, costs and payoff
Seller Note Value
$976,564
$1,000,000 face
Earnout Value
$300,000
$600,000 at 50%
Headline Consideration
$4,000,000
Every piece at face
Risk-Adjusted Value
$3,676,564
8% under the headline
The Reading
A $4,000,000 headline is really worth about $3,676,564 to you, roughly 8% under the sticker: the $1,000,000 note is worth about $976,564 once its 5-year payout is discounted at your 8% rate (a $23,436 cost of waiting), and the $600,000 earnout is worth about $300,000 at 50% odds of hitting the target (a $300,000 risk cost). A buyer offering more cash at a lower headline can beat this, so compare offers on the risk-adjusted number, not the one in the press release.
All figures are before taxes. Inputs travel in this page's address, so a structure can be shared by copying the URL.