The Earnout Trap: How to Structure Deals That Actually Close with Salim Dada | This Is M&A

Most earnouts are never earned. Most founders do not know why until it is too late. In this episode of This Is M&A, Salim Dada, Managing Director and CEO of Concord Ventures, breaks down the three deal structure decisions that determine whether a founder walks away with what they expected: cash versus equity, earnouts and seller financing, and leveraged buyouts in today's credit environment. Salim has closed more than 100 business sales across technology, aerospace and defense, manufacturing, logistics, pharmaceuticals, infrastructure, and retail. He has been doing this since 2001, focuses on transactions between $20M and $100M in enterprise value, and is based in Seattle where aerospace and defense M&A keeps him very busy. In this episode, you will learn: ⚡️ When to take cash and when rolling equity actually makes you more money ⚡️ Why earnouts based on revenue protect sellers and earnouts based on profit almost never do ⚡️ How to structure seller financing so it does not go south ⚡️ What platform versus add-on means and why it changes your negotiating position ⚡️ Why private equity stopped going to banks and what that means for deal financing today ⚡️ Why honest conflict early in a deal is almost always a better sign than polite agreement Learn more about Salim Dada and Concord Ventures: Website: https://concordventuresinc.com/ LinkedIn:   / salimdada   Email: [email protected] Connect with your host, Steven Monterroso: LinkedIn:   / determined2succeed   Follow This Is M&A Podcast on LinkedIn:   / this-is-m-a   Want to become our next guest? Sign up or subscribe: https://sharevault.com/this-is-ma/ Listen now on Apple Podcasts, iHeartRadio, Spotify, and all major podcast platforms. #thisismapodcast #mna #exitplanning #founders #dealstructure #earnout #privateequity #middlemarket 00:00 Intro 02:33 Cash Vs. Stock: When To Take Chips Off The Table 07:29 Case Study: Turning A Skeptical Seller Into A Believer 18:03 The Golden Rule Of Earnouts (Revenue Vs. EBITDA) 22:55 Seller Financing: How To Vetting Your Buyer's Pockets 30:34 Platform Vs. Add-On: Know Your Position In The Portfolio