What is in a private equity offer besides the price?
Four pieces that are not cash at closing
Last reviewed November 9, 2026. A roll-up is a buyer that already owns other companies in your trade, or intends to, and wants to add yours. The first call usually leads with one number. That number is a way of talking. The letter of intent is the list of what you would actually receive, and when, and on what conditions.
Ask them to split the number into cash at closing and everything else. Then read the four pieces below against your letter. Your letter is the only one that names your terms.
Rollover equity is stock in their company, not cash
Rollover equity means part of the price is not paid in cash. You keep a piece of the buyer’s company instead. Sometimes that company is the one they form to own yours. Sometimes it is the platform that already owns several shops. Either way, you are no longer the owner who can decide when to sell. You are a minority holder in a company they control.
That piece is worth something later only if their company is worth something later, and only when a sale or other payout they control actually happens. You do not pick the date. You do not pick the buyer. If they never sell, or they sell for less than the story you were told, the rolled piece is not the cash you declined at closing.
Before you count it, ask what you would own, in which company, who can force a sale, and what happens to your piece if you leave. If the letter does not answer those questions, the rolled amount is a label, not money.
An earnout is a later payment that depends on a result
An earnout is a promise to pay more after closing, and only if the company hits a result written in the agreement. The result might be revenue, profit, or keeping customers. If the result is missed, that part of the price is not paid.
After closing, the buyer runs the company. They set prices, they hire and fire, they decide which jobs to take, and they can change the way the books are kept. Your payment then depends on a result you no longer control. Read the definition of the result in the letter: who measures it, from which set of books, and what happens if they change how the company operates. If the definition is “to be agreed,” do not treat the earnout as part of the price.
A seller note means you are financing part of the price
A seller note is a loan from you to the buyer. They pay that part of the price over time. It is not cash at closing. If they pay, you collect it as a creditor. If they do not pay, you are owed money by a company you no longer control. You are not an owner who already received that money.
The note should say what you are owed, when it is paid, what secures it, and where you stand if the buyer borrows from a bank or stops paying. A note with no security is a promise. Read it that way until the paper says otherwise.
The peg can change the price at closing
The working-capital peg is the working capital the buyer expects left in the business so it can make payroll and pay suppliers without a cash injection on the first day. Look at whether your letter is cash-free and debt-free. On that form, extra cash stays with you and the debt is paid off, and the peg is what still has to be left behind.
If the working capital actually left in the business is short of the peg, the price goes down by the shortfall. If it is over the peg, the price goes up by the extra. The peg is not a rounding error. It is a second negotiation, and it happens when the buyer is already in your books. The working-capital peg guide is how that number is built. Use your letter for the target, not a number from someone else’s deal.
They will also test the profit, and they will pick a structure
The profit in the offer is the profit they are willing to pay for, not the profit on last year’s tax return. A quality of earnings review is how a buyer takes out items they will not count, and how they test customer concentration risk and contractor WIP and over-billing schedules. Read the quality of earnings guide and our unsolicited private equity LOI checklist before you defend a stack of add-backs from memory or sign exclusivity.
The same letter will say whether they are buying the assets or the stock of the company. That choice changes the tax and what comes with the sale, including contracts. It is a different question from the price. The asset sale and stock sale page is the comparison. For a licensed trade, neither choice moves your personal license to the buyer. That is a separate question, answered on the Texas contractor license page.
Add the cash at closing. Set the rollover, the earnout, and the note beside it, and do not add them until the letter says when they are paid and what has to be true. Then read the peg as a price change, not as a detail for the lawyers to find later.