What are some deal structuring options to mitigate the trustee's risk if the bridge is less predictable?
Published on 2025-02-17 | Last edited on 2025-02-17
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Short Answer
The following two categories of deal structures can mitigate the risk of historical cashflows being substantially lower than forecasted cashflows:
- Create a financial incentive structure to align the seller's interest with continued performance of the business. E.g., earnouts, clawbacks, seller financing
- Execute the deal at a lower initial valuation based on conservative projections.
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