Compare the life, cash flow and wealth a sale would leave you with.
A price tells you what an offer is called. The terms explain how much money reaches you, when the rest might arrive and what you would still have to do. Transaction Value brings that complete picture back to your ownership goals.
You can examine a hypothetical sale before a buyer appears. Keeping the company can be the supported conclusion.
Similar prices can produce different choices
Imagine two hypothetical offers for the same $5 million equity value. One pays $5 million at closing. The other pays $3 million at closing and a $2 million seller note. Before fees and taxes, the stated prices match. Access to the money and dependence on the buyer do not.
With a note, you become a lender. With retained equity, you remain an investor. Continuing employment leaves you with a job. Examine each relationship and the conditions it creates before treating the headline price as independence.
| Part of the deal | What you need to understand |
|---|---|
| Cash at closing | The gross amount, fees and estimated taxes, then net cash actually available. |
| Seller note | Payment timing, interest, maturity, security, priority, credit risk and tax treatment. |
| Escrow or holdback | Release dates and claims that could reduce the amount returned. |
| Earnout | Conditions, calculation, timing and who controls the performance behind it. |
| Retained or rolled equity | Economic rights, debt, preferences, dilution, control and a possible route to liquidity. |
Keep uncertain upside separate from money available now. A buyer’s financing also matters when your remaining payments or equity depend on the business’s cash flow.
Build the two-date comparison
Use a current checkpoint and a chosen future date. At each date, compare continuing to own the company with a sale occurring at that date. Selling now and investing the proceeds for several years is a separate scenario.
Page 1: follow value into proceeds. Carry in supported earnings, multiple, debt and eligible cash. Identify other claims and the ownership interest being sold. Allocate equity into the deal components, then calculate net closing cash after fees and estimated taxes. Retain dates, detailed calculations and conditions in the supporting model or deal notes.
Page 2: compare the whole Scorecard. Show operator, ownership and personal hours totaling 168 each week. Compare annual salary, distributions and other cash on a consistent after-tax basis. Separate ongoing rates from a partial transition year. Then compare business equity, savings, net property and later claims at the same date.
Net proceeds enter savings once. As a note is paid, principal moves from the note asset into cash; that does not create the same wealth twice. Note payments also end. Retained equity can be valuable without funding your current lifestyle.
Preserve your original Scorecard as the goal record. The existing Scorecard PDF helps you establish those goals if you have not recorded them yet. The Keep It / Sell It comparison tests the choices against them.
Decide which conditions matter to you
Financial conditions might include liquid capital, repayment timing or acceptable dependence on future results. Personal conditions might include transition work, decision rights, employee commitments or family priorities. Distinguish a preference from a firm limit.
The optional Financial Transaction Comparison and Intangible Transaction Comparison put specific alternatives beside the same criteria. Keep each buyer or hypothetical scenario in the same row on both sheets. Future Role and Future Control are separate questions. An attractive price cannot average away a condition you are unwilling to accept.
A strategic buyer, acquisition entrepreneur, internal successor, ESOP, family office or private equity investor may bring different purposes and funding. The category helps you ask questions; the actual terms establish what you are agreeing to. Do not infer an all-cash offer, protected culture or a tax result from the label alone.
Complete the comparison and use it
The four actions below establish a usable decision. Suitable existing work counts; a sale or a quota of alternative buyers is not required.
Open the four actions and their completion requirements
1. Calculate sale proceeds at two dates
Choose today’s checkpoint and a future date. Use the same dates on both pages of the comparison, the original Scorecard goals and supported Milestone 5 values. Identify the ownership interest and money bases. Distinguish actuals, goals and forecasts; a target alone is not evidence of future market value. The future date need not be exactly five years away.
State who buys what and whether the terms are offered or hypothetical. Identify ownership sold and retained, funding, rights and work obligations. Allocate the equity value between gross closing cash, seller note, escrow, earnout and rollover. Reconcile the components; show contingent upside separately when it is outside the base price. Buyer category alone does not establish funding, price, independence or tax treatment.
Calculate net closing cash after fees and estimated taxes. Retain the sources or explicit planning allowances. Keep later claims distinct, with timing, priority, conditions and uncertainty. A flat percentage of gross cash is a planning allowance, not a completed tax calculation.
Complete when: both dated calculations are traceable and material tax/fee uncertainty is bounded enough to judge the decision. Uncertainty that could reverse the conclusion remains open.
2. Compare Keep It / Sell It across the whole Scorecard
At each date, compare operating, ownership and personal hours; annual cash flow on matching tax bases; and the dated wealth picture. Distinguish transition-year receipts from ongoing annual rates. Include continuing employment, note payments and their end date, portfolio assumptions, retained equity and remaining claims.
Count note principal as an existing asset becoming cash when paid. Add net proceeds to savings once. Rollover remains business equity. Keep the original Scorecard and goals intact.
Complete when: all three dimensions are compared at both dates. A sale now followed for five years is a different scenario from a sale occurring at the future checkpoint.
3. Establish your conditions and challenge the deal
Record the financial and personal conditions that matter, distinguishing preferences from firm limits. Existing non-negotiables can supply this work. Test at least one consequential downside, such as a missed contingent payment, a longer transition or lower portfolio cash. Explain its effect and identify unresolved terms.
Complete when: the conditions and challenge inform your choice. No required three-to-five buyer scenarios, automatic goal reduction or rule that closing cash must equal DCF applies. A firm condition cannot be averaged away by a high rating elsewhere.
4. Review the comparison and choose the next step
Complete an actual owner review covering both dates, the conditions and downside. Record your decision or supported continuation, next action, responsible person, due date and next review. Seek appropriate financial, tax or transaction input for material assumptions you cannot support.
Complete when: you have examined the trade-offs and adopted a next step. Keeping the company can be a complete result. A live offer, signed agreement or sale is not required; a prepared recommendation or future meeting alone does not establish use.
Review the milestone-specific 0–3 score and evidence test
0 (Not Started). You have not begun examining what a sale would mean for your Time, Cash Flow and Wealth.
1 (Learning). You can distinguish market equity value, gross closing cash, net proceeds and later or retained interests, and explain why selling may not deliver the life you want. You have not yet applied that comparison to your business.
2 (In Progress). Your sale comparison is underway. One or more requirements remain incomplete: terms or proceeds need support, the dated Keep It / Sell It comparison is unfinished, a material uncertainty has not been tested, or the owner review has not occurred.
3 (Installed). You have compared keeping and selling at the current and chosen future dates using the same ownership goals, supported market values and explicit deal assumptions. Net closing cash, later claims, retained equity and ongoing work are distinguishable. You have tested a meaningful downside against your financial and personal conditions, completed a real owner review, and recorded the decision, next action or supported continuation and next review. A hypothetical transaction can establish this capability; an offer, sale or extra set of forms is not required.
The evidence test: Show the two dated market-value and sale-proceeds comparisons and the matching Keep It / Sell It Scorecard. Explain what is cash now, what depends on later payment or retained ownership, what work remains, and how each scenario supports or misses the same-date Time, Cash Flow and Wealth goals. Show your financial and personal conditions, a meaningful downside, and the owner review with its decision, responsible person/date and next review.
You choose your score after reviewing the evidence. Keep peer, coach and AI assessments separate, including what each person could inspect. Unreviewed evidence is not an automatic zero. Preserve earlier reviews and the reasons for your chosen score. A checked box, prepared AI answer or future meeting invitation does not establish actual use.
Keep the decision connected to the plan
Keep the completed comparison with your Scorecard Wealth support in The Plan. Keep the detailed calculations and dated terms in The Numbers. Review annually, check material changes quarterly and refresh the comparison before relying on new terms.
Module 1 established what you want. Module 2 makes the business and the trade-offs visible. Module 3: Owner’s Playbook connects that work to the company plan and the reviews that keep it useful.
Explore the idea further
- Deal Structures and Net Proceeds with Dave Diehl, episode 427. Separate closing cash, later payments and retained equity.
- Selling and Building Again with Matt Curry, episode 482. Consider whether a sale or a change in operating role addresses the outcome you want. The $18 million in the episode title describes business revenue, not sale proceeds.
Choose your next step
Put the work in context. The Ownership Assessment helps you examine the capabilities behind your plan, find evidence still to review and choose useful work. It does not turn your self-score into a valuation.
Work through the decisions with support. The 90-Day Boardroom Blueprint connects your goals, financial foundation and decisions in your first usable Owner’s Playbook. You can explore support directly; completing the Assessment is not a prerequisite.
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