For: Founders comparing offers, or wondering what an exit would really mean

How much will I actually take home when I sell my company?

Where the line actually sits

1st

Debt and deal costs

Loans, bankers and lawyers are paid before anyone else sees a dollar.

2nd

Liquidation preferences

Investors usually get their money back before anyone else. Preferences stack, one for each round.

3rd

Everyone else, by ownership

What remains is split among founders, employees with options and investors who convert. Each funding round and the option pool shrink the founders' share.

Last

Taxes

Your share is taxed, and the rate depends on how and when you got your shares. It can be the biggest line.

What changed in the last year

• More of the price now arrives later. Earn-outs and holdbacks delay part of the price, and some of it may never arrive.
• Terms agreed in early rounds follow you to the exit. A good valuation with aggressive preferences can cost more than a lower one with clean terms.

What most founders get wrong

• “The bigger offer wins.”

  Compare offers on cash at close, not price. Earn-outs, escrow and holdbacks can make a bigger number worth less.

• “I'll deal with taxes after it closes.”

  Plan for taxes before the deal is structured. Bring in an accountant early, not when the wire arrives.

• “We'll sell for what we hope.”

  Model the outcome at a lower price than you hope for. That's where preferences hurt most.

When I'd tell you the opposite

• If you never raised outside money and have no debt, most of the stack disappears and price and take-home get much closer.
• If the deal is mostly stock in the buyer, what you take home depends on what that stock is worth later, not on the day you sign.

Related questions

What should I negotiate besides price?

Cash at close, earn-out terms and who controls them, escrow and holdbacks, your role after the sale, and what your employees get.

Who should I bring in?

A lawyer who does M&A regularly, an accountant to plan taxes before the structure is set, a banker or broker for larger deals, and a financial planner for after.

Read the full article: What You Actually Take Home When You Sell Your Company