Deferred Purchase Price Structure

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May 06, 2026

by a searcher from Georgia Institute of Technology in San Francisco, California, USA

How common is it to structure an acquisition with a portion paid upfront at close and the remainder paid shortly after (ex: 80% at close and 20% within 90 days)? - bank financing is already approved, - seller financing exists, can’t go above 10% - and the buyer is mainly optimizing working capital flexibility during transition? Curious how often people see: - staged cash payments, - temporary bridge structures, - or delayed seller payouts in SMB software acquisitions. Would love to hear how others have approached this.
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Reply by a professional
from New York University in Miami, FL, USA
Very common. Though, the payment post-closing should be via a promissory note and also ideally secured. Happy to provide additional insight. Definitely something you want to make sure your attorney is properly handling and also you need to ensure your lender is OK with this.
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Reply by a professional
from Michigan State University in Brighton, MI, USA
Appreciate the tag @redacted‌. Interesting topic, you’re basically talking about deferred purchase price vs pure seller financing. In the SMB deals I’ve seen, a structure like 80% at close, 20% within 60–90 days usually shows up in cases where: • the buyer wants a little short‑term working capital breathing room right after close, and • the seller is comfortable that the bank/SBA funds plus their note already cover most of their economics. From my experience, these aren’t common per se, but at the same time I wouldn’t really call them out as being unusual either. Here are a few patterns I’ve seen work in practice: • Staged cash at close with 70% at closing, 10% at day‑90, and 20% as a seller note over 3–5 years. The day‑90 payment was only tied to there being no major problems (MAE) or fraud, rather than to how the business performed. • Temporary bridge to refi where the buyer closes with a higher seller note. The buyer then uses a refi or term loan 6–12 months later, to take the seller out, effectively becoming a deferred purchase price that’s funded later. • a Short “stub” holdback with 5–10% deferred, and 90–180 days to cover the working capital true‑up or specific closing adjustments. This one is typically more common in asset‑heavy or seasonal businesses. The big things I watch for on the buy‑side are: • that the deferred piece is clearly documented as part of total purchase price (not an earn‑out in disguise), • that covenants and default triggers match the reality of the first 6–12 months of ops, and • that the schedule doesn’t accidentally blow up your DSCR or SBA covenants.
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