The Only Number That Matters Is the One That Lands
Every sale has two numbers: the headline price and what actually lands in your account. The distance between them is negotiable — if you see the bridge early.
There are two numbers in every business sale.
The first is the one you tell your spouse. It's the headline — the purchase price, the multiple you got on EBITDA, the figure you'd say out loud if someone asked what you sold for.
The second is what's actually in your account after everything is finished and the tax is paid.
The distance between those two numbers is usually much larger than sellers expect, and almost everything that goes wrong in a sale is some version of an owner negotiating hard over the first number while paying no attention to the second.
The bridge between them
Start with the headline price. Then work through what stands between it and your bank account:
Debt payoff. Most deals are priced cash-free and debt-free, which means your equipment notes, your line of credit, and your capital leases come off the top.
The working capital adjustment. You agreed to leave a normalized amount of working capital in the business. If you land below the peg, the price comes down — and this one is often settled months after closing.
Transaction expenses. Your attorney, your CPA, your investment banker or broker, sell-side quality of earnings work, insurance review. These are real numbers and they come out of your proceeds.
Escrow or holdback. Money you don't receive at closing, released later if nothing goes wrong.
Earnouts, seller notes, and rollover equity. Not cash. Scheduled cash, contingent cash, or an investment in someone else's business.
Accrued employee obligations. Accrued vacation and PTO, earned bonuses, retention payments the buyer wants funded to keep your people. If you've carried a generous PTO policy for twenty years, that liability is larger than you think, and it will get quantified whether or not you quantified it first.
Whatever turns up afterward. Indemnity claims, undisclosed items, the thing nobody knew about until month four.
And then tax.
Every one of those is negotiable in some way, and every one of them is easier to negotiate before the LOI than after.
Doing it well costs money, and that's fine
Here's something worth accepting early: the better you do this, the more you'll spend doing it.
Real transaction counsel is expensive. A sell-side quality of earnings is expensive. Good tax advice ahead of the deal, rather than after, is expensive. Owners look at those invoices during an already stressful stretch and feel like they're being nickeled.
I'd think about it differently. A working capital peg negotiated correctly can be worth many times what your attorney charges to negotiate it. An indemnity cap moved in the right direction can be worth more than the entire legal bill. The money you spend getting this right is the cheapest money in the transaction — but it is money, it comes out of your proceeds, and you should budget for it rather than be surprised by it.
The Texas item that catches trade businesses
If your deal is structured as an asset sale, here's a leak most sellers never see coming.
Texas exempts the sale of the entire operating assets of a business from sales tax under the occasional sale exemption in Section 151.304 of the Tax Code. Good news: your tools, equipment, and inventory generally ride along on that.
But motor vehicle tax law has no occasional sale exemption. The purchaser owes Texas motor vehicle sales tax on the transfer of each vehicle.
Now count your trucks.
For an HVAC, plumbing, or electrical company running thirty or forty vehicles, that's a meaningful number sitting in the middle of your closing. It's legally the buyer's tax — but anything that costs the buyer money at closing has a way of becoming a negotiation about price. Better to have that conversation with your eyes open than to have it sprung on you.
This is the kind of item to work through with your CPA and your attorney while the structure is still being decided, because how the deal is structured determines whether it comes up at all.
Tax is the biggest subtraction and the earliest decision
The largest single reduction between headline and net is almost always tax, and the amount is driven by decisions made long before closing — asset sale versus stock sale, how the purchase price is allocated, how deferred consideration is treated, how any rollover is handled.
By the time you're signing, most of that is locked. The conversation that actually moves the number happens while structure is being negotiated, which is to say at the LOI stage.
I'm not going to give you tax guidance, and you shouldn't take it from a website. What I'd tell you is when to have the conversation: early, with a CPA who has done transactions rather than only returns, and before you've agreed to a structure.
Negotiate the bridge, not the headline
Once you can see all of it laid out, something shifts.
A buyer offering a higher price with a punitive working capital peg, a large escrow, a long earnout, and a structure that maximizes your tax may be offering you less than a buyer with a lower headline and clean terms. That's not a hypothetical. That's most competitive processes.
And when you know the bridge at the start, every item on it becomes something you can negotiate rather than something that happens to you. The peg. The escrow size and release schedule. Who funds retention payments. How accrued PTO is treated. Which expenses come off your side of the ledger.
Each of those is a line you can push on. Together they routinely add up to more than the difference between two competing headline offers.
The right number
So when someone asks what your business is worth, the honest answer is that the multiple is a starting point and not much more.
What you're actually selling for is what remains in your account after the payoffs, the adjustments, the fees, the holdbacks, and the tax — and after whatever arrives later actually arrives.
Focus on that number from the first conversation. It's the only one you get to keep.