Deal Structure

Holdback

Part of the purchase price that is held back for a period of time to protect the buyer. Why it matters: A holdback is similar to escrow but may be held by the buyer, so the seller should know when and why it can be kept.

Related terms

Purchase Price
The amount the buyer agrees to pay for the business. Why it matters: Purchase price only tells part of the story; timing of payment, seller notes, earnouts, rollover equity, escrows, and taxes can change the real value of the offer.
Seller
The current business owner who wants to sell the business. Why it matters: The seller is not just handing over ownership; they are also proving the business, answering diligence requests, negotiating risk allocation, and often helping with transition.
Escrow
Money held by a third party after closing to cover possible claims or adjustments. Why it matters: Escrow protects the buyer against certain claims, but it delays part of the seller’s proceeds and should have clear release rules.
Buyer
The person, company, investor, or fund trying to buy the business. Why it matters: Different buyers value different things, so knowing the buyer type helps an owner understand likely questions, risks, financing needs, and negotiation style.

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