This is evident from research by acquisition platform Brookz, which analyzed 937 purchase agreements.
Despite all the uncertainty in the world, the number of company sales remains high and average sales prices are stable at a high level. However, sellers are increasingly weaker.
According to Peter Rikhof, founder of Brookz, this weakened negotiating position is a direct result of the uncertain economic prospects. “As sellers hold on to the current high price level, it is logical that buyers want to hedge as much future risk as possible.”
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Deferred payments are clearly gaining ground: almost four in ten deals contained an earn-out, almost three in ten a subordinated loan and a quarter combined both. Full payments in one go are rare: only 9 percent, compared to 17 percent a year earlier.
Certainties
Not only is the number of earn-outs and subordinated loans increasing, the share in the total purchase price is also growing: earn-outs increased from 34 to 43 percent, subordinated loans from 28 to 31 percent. Buyers also use other securities such as asset maintenance declarations (75 percent), settlement with vendor loans (42 percent) and personal guarantees (21 percent).
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And to prevent the selling entrepreneur from becoming active in the same sector again in the foreseeable future, 98 percent of all purchase agreements include a non-competition clause for a period of one to three years. An increase of 4 percent compared to last year.