2d • General discussion
Potential Belongs In Structure. Proven Cash Flow Belongs In Price
A seller wanted credit for future growth.
The buyer asked a fair question.
“If the growth is already certain, why are you selling before capturing it?”
That question is not rude.
It is underwriting.
Sellers often want to price the business based on what it could become. Buyers should pay primarily for what the business has already proven.
Upside can be shared.
Earnout.
Seller note.
Performance-based payment.
Revenue retention structure.
Growth milestone.
But paying cash at closing for future execution the buyer must create is dangerous.
The seller may be right about the opportunity.
But the buyer still has to fund it, manage it, and absorb the risk if it does not happen.
Potential belongs in structure.
Proven cash flow belongs in price.
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Potential Belongs In Structure. Proven Cash Flow Belongs In Price
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