M&A consideration structure simulator
See how enterprise value splits across cash at close, seller note and contingent tranche — and what total return looks like once you adjust for time and risk.
Agreement parameters
Split enterprise value across tranches; the contingent amount is the residual to reach 100%.
You receive at closing
$2,250,000.00
Cash at closing
You receive deferred (note)
Principal: $7,500,000.00
Annual interest: $900,000.00
Total interest (3 years): $2,700,000.00
Total note: $10,200,000.00
Monthly payment (simple): $283,333.33
You receive if conditions are met
$5,250,000.00
Subject to post-closing conditions. May be reduced by liabilities or failure to meet metrics.
| Tranche | Amount (MXN) | % of EV | Certainty |
|---|---|---|---|
| Cash at closing | $2,250,000.00 | 15 % | High |
| Seller note — principal | $7,500,000.00 | 50 % | Medium |
| Seller note — interest | $2,700,000.00 | — | Medium |
| Contingent amount (maximum) | $5,250,000.00 | 35 % | Low |
| Maximum total consideration | $17,700,000.00 | 100 % | — |
When you receive each tranche
Maximum total consideration: $17,700,000.00
Cash guaranteed at closing: $2,250,000.00 (12.71 % of total)
The seller note and contingent amount have a present value below nominal. Cash at closing is the only amount without counterparty or performance risk.
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What other tools and guides to review?
This simulator is a reference tool; real terms depend on business risk profile, negotiated structure and market conditions. To see how each tranche fits the deal, see the guide to structuring a seller note in Mexico; definitions: earn-out and LOI.
Sources
Consideration structure (cash at close, seller note, contingent tranche) and present-value criteria draw on M&A practice and seller-financing guidance:
- Morgan & Westfield. "M&A Seller Financing: A Complete Guide." 2023. Available online.
- Advisor Legacy. "How to Structure a Seller Note: Smart Seller Financing for Buying a Business." 2022. Available online.
- Davis Wright Tremaine LLP. "How Seller Financing Can Get a Deal across the Finish Line." 2020. Lexology. Available online.