A founder can spend six months negotiating a 100 million valuation and still end up several million dollars short of what actually reaches the bank account. That gap is not the result of bad luck or bad faith. It comes from the mechanics buried beneath the headline number.
That is the focus of this webinar, part of Venero's Complete Tech M&A Playbook. Elie Youssef and Georgios Markakis walked through how a headline enterprise value translates into real shareholder proceeds, and why the definitions, assumptions, and drafting behind that translation deserve just as much attention as the price itself.
The headline is only the starting point
Picture the moment a buyer improves its offer and the board starts talking about a 100 million exit. Then the detailed terms arrive. The deal is cash-free and debt-free. Certain liabilities are treated as debt-like. The business must be delivered with normal working capital. Part of the consideration sits in escrow. None of that changes the headline number, but it changes what the seller actually walks away with.
The risk is not that these terms exist. Nearly every technology deal includes them. The risk is treating them as finance or legal detail to be sorted out later, rather than as commercial terms that deserve to be negotiated while leverage still exists.
What cash-free, debt-free really means
Most technology acquisitions are agreed on a cash-free, debt-free basis, which sounds simple but carries real consequences. Enterprise value reflects the operating business itself: the product, the customers, the people, and the commercial engine that produces revenue and profit. It does not automatically belong to the shareholders in full.
Surplus cash above what the business needs to operate is generally retained by the seller, but the word "surplus" does the heavy lifting there. Some cash may be restricted or needed to keep the business funded through completion. On the other side, debt and debt-like items get settled from the proceeds, and this is where things get complicated. Shareholder loans, accrued bonuses, overdue payroll taxes, and deferred consideration can all be argued as debt-like, even when they were never labelled as debt in the accounts.
Following the money: the proceeds bridge
The clearest way to see how this plays out is to build a proceeds bridge. Starting from a 100 million enterprise value, the webinar walked through a worked example: add surplus cash, deduct debt and debt-like items, apply any working capital adjustment, arrive at gross equity value, deduct transaction costs, and finally set aside an escrow holdback.
By the end of that bridge, the 100 million headline had become 82 million of cash at closing. Nothing about the deal had gotten worse. The number simply moved through a series of adjustments that most founders don't model until it's too late to negotiate them.
The lesson is that enterprise value, equity value, net proceeds, and cash at closing are four different numbers, not four names for the same thing. A credible offer has to be judged across the full bridge, not by the figure at the top of the term sheet.
Working capital: the item that surprises the most people
Working capital deserves special attention because it is often the largest and most contentious adjustment. The buyer wants a business capable of operating normally on day one, without needing to inject cash immediately. That means the seller cannot artificially drain the balance sheet before completion by delaying payments or accelerating collections.
To prevent that, the parties agree a working capital peg, typically based on a representative historical period. Deliver less than the peg at completion and the price falls, usually dollar for dollar. Deliver more, and the seller should receive an upward adjustment. The arithmetic is simple. The real negotiation is in defining what counts as "normal," since a seasonal business, a fast-growing services company, and a SaaS business billing annually in advance can all have very different working capital profiles.
Because the actual balance sheet doesn't exist at signing, most deals also include a post-close true-up, where completion accounts are prepared weeks after closing and compared against the peg. That means a seller's negotiating leverage on this point is strongest before exclusivity, not after.
Not all consideration is created equal
Even once the price mechanics are settled, timing and certainty matter enormously. Cash at completion is the cleanest form of value. Escrow is set aside against potential claims but is at least confirmed to exist. A holdback is retained directly by the buyer, which introduces credit and set-off risk. Deferred consideration is a fixed future payment, but it still carries timing and buyer-credit risk. An earn-out is the least certain of all, contingent on performance the seller usually no longer controls.
This is why two offers with the same headline number can look very different once broken down. An offer of 92 million with the bulk paid at closing may ultimately be worth more to a seller focused on certainty than a 100 million offer where a large share sits in an earn-out that may never fully pay out.
Closing mechanics are commercial terms, not just paperwork
The core message of the session was simple: a buyer doesn't need to lower the headline price to improve its own economics. It can leave the number unchanged and instead negotiate a broader debt-like definition, a higher working capital peg, a larger escrow, or more contingent consideration. The founder ends up with less cash and more risk, while the number on the term sheet stays exactly the same.
Every definition in the purchase agreement should be tested: what does it include, is it already captured elsewhere, who controls the calculation, and what does the downside scenario look like? Modelling that downside before signing, while leverage still exists, is far more effective than discovering it after completion.
Final thought
Months of work negotiating a strong valuation can be undone by a poorly negotiated set of closing mechanics. The businesses that achieve the best outcomes treat these terms with the same discipline they apply to the headline price itself, asking what actually reaches the shareholders, when it arrives, and what could still reduce it along the way.
That is the number that matters. Not the one on the term sheet, but the one that lands in the bank.
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