Translating purchase price to takeaway cash at closing

Agreeing on the purchase price for your business is an important first step in any sale process. However, it is crucial to understand the distinction between base purchase price and the amount of cash you ultimately take home. Thoughtful consideration of the following terms in middle-market transactions can prevent unwelcome surprises: (1) cash-free/debt-free; (2) earn-outs; (3) rollover investments; (4) working capital adjustments and (5) escrows.