#427: Navigating Deal Structures: The Hidden Factors That Impact Your Net Proceeds with Dave Diehl

Most business owners focus on the offer price when selling their business—but the deal structure is what ultimately determines how much you walk away with, when you get it, and how much risk you take on. 

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In this episode of Independence by Design™, I sit down with Dave Diehl, CEO of Prairie Capital Advisors, to demystify the complex world of deal structures. Dave walks us through the key components of a transaction—working capital adjustments, earnouts, equity rollovers, seller financing—and how these elements impact the final proceeds for a seller. 

We also explore how deal structures reflect both buyer and seller goals, and why aligning these goals is critical to a successful transaction. If you’ve ever been confused by the fine print in a deal or wondered why buyers push for certain terms, this conversation will give you clarity and confidence to navigate your own transition.  

This episode builds on the foundations from previous episodes, diving into the practical details of how deals are structured and the hidden factors that can significantly impact your outcome. Whether you’re preparing to sell, thinking ahead, or just trying to understand what a good deal looks like, this conversation is packed with insights and actionable advice.  

Dave Diehl is the CEO of Prairie Capital Advisors, specializing in helping business owners navigate the complexities of M&A transactions and ESOPs. With decades of experience in deal structuring, Dave has guided countless owners through successful transitions, ensuring their goals are front and center.

Chapters:  

• (00:00) Introduction, discussing deal structures, understanding working capital   

• (04:11) Impact of working capital on business sales, optimizing cash flow and working capital   

• (13:30) Transitioning to deal structures, Prairie Capital Advisors' approach   

• (19:15) Balancing ownership and operations   

• (27:14) Earnouts and their implications   

• (38:32) Valuation and fair value, seller notes in acquisitions, private equity buyers and capital challenges, the role of equity in private equity deals   

• (44:08) Risks and realities of private equity investments, including the impact of debt on company growth, challenges with private equity and debt structures, and the importance of evaluating assumptions in private equity deals. Additionally, we'll explore due diligence, partner selection, and the different types of buyers and their expectations   

• (53:36) The ESOP option: Benefits and considerations, structuring ESOPs for optimal outcomes, ESOPs vs. private equity sales   

• (1:06:44) Estate planning and warrants in ESOPs, operational strategies and value growth   

• (1:16:05) Prairie Capital Advisors: Client profiles and services   

• (1:20:04) Conclusion and final thoughts 

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Ryan Tansom is a seasoned entrepreneur, speaker, and the founder of Independence by Design™, a transformative ownership framework for