In small-business deals, terms often matter more than price. The same headline number can be a great deal or a terrible one depending on structure, financing, transition support, and the relationship that comes out of it.
Price vs. terms
A $1M business at full price with 10% seller financing over 7 years at 6% can be a better deal for the buyer than the same business at $850K all-cash. Structure changes the cash you bring, the risk you carry, and the cash flow you have to operate the business after close. Negotiate the whole package, not just the headline.
Seller financing terms
Down payment, note size, interest rate, amortization, balloon, security, and personal guarantees are all negotiable. Buyers want lower down payments, longer terms, and lower rates; sellers want the opposite. A reasonable middle ground in today's market: 10–25% down, 5–7 year terms, 6–8% interest, with the note subordinated to any senior SBA debt.
Earn-in milestones
When part of the deal is contingent on future performance, the milestones must be objective, measurable, and within the buyer's control. Tie earn-in to revenue, gross profit, or contract retention — not to subjective measures. Document the formula clearly so there's no dispute later.
Transition and training
Most owners agree to some transition support post-close — typically 30–90 days full-time, with a longer consulting tail. Negotiate this up front: scope, hours, compensation, and what happens if the buyer needs more time. A good transition agreement is often worth more than a small price concession.
Working capital target
The deal price assumes a certain amount of working capital comes with the business. Define the target before close. At close, working capital above target benefits the seller; below target benefits the buyer (or triggers an adjustment). Disputes here are common and avoidable with clear language.
Walking away
The best negotiators always have a real walk-away point. If you can't walk, you can't negotiate. Know your maximum price, minimum structure, and the issues that would end the deal — before you start.
Frequently asked
6–8% in current market conditions, often pegged to Prime plus a spread. Lower rates are more common when the seller has more confidence in the buyer.
30–90 days full-time is typical, with a 6–12 month consulting tail at reduced hours. Adjust to fit the business's complexity.
Yes — material findings justify renegotiation or walking. But raising small issues to grind down price after LOI damages trust and often kills deals.
Some buyers do, especially in main-street deals. In any deal with a broker, M&A advisor, or attorney involved, route negotiations through them to keep the relationship clean.