Making and countering an offer
Price is one term out of five, and rarely the one that kills a deal. Structure, timing, what stays in the business, and who carries the risk after close matter as much — and they are where a well-built offer wins against a higher number.
The five terms of any offer
Anchoring without insulting
An offer materially below the valuation range needs a reason attached, in the same message. "Your customer concentration at 31% is above the sector median, which is why I am at 4.1× rather than 5" is a negotiation. The same number with no reasoning reads as an insult and gets you ranked below the next buyer.
Sellers forgive a low offer they understand. They rarely re-engage after one they do not.
When an earnout helps
- The seller is confident about growth you cannot yet verify. An earnout lets them prove it and get paid for it.
- A key customer contract renews shortly after close, and neither side can predict the outcome.
- The owner is staying on and their involvement genuinely drives the result.
It does not help when you are simply short of the price, or when the metric is one you control after close. Earnouts tied to profit rather than revenue are the ones sellers refuse, because you can move profit.
Reading a counter
Look at which terms moved. A seller who holds price but stretches transition support is telling you the number is emotional and the structure is flexible. One who cuts the earnout and takes less cash is telling you they want certainty and speed. Answer the signal, not the number.
What sellers push back on
- Earnouts longer than twelve months, or measured on anything the buyer controls.
- Working capital pegs set without a stated calculation.
- Long exclusivity periods with no diligence deadline attached.
- Financing contingencies with no proof of funds behind them — which is where verification does real work.
Moving from offer to LOI
Once the five terms are agreed in the thread, put them in a letter of intent. It is non-binding, but it fixes the shape of the deal, starts formal diligence, and sets the exclusivity clock. Attach a diligence list and a target close date so both sides know what happens next.
Confirm whether Revanu will provide LOI templates and offer submission inside the platform, and the median spread between asking and closing price, so this article can be specific about both.