Creative Deal Structures You Should Be Using (But Probably Aren’t)

Most people think buying a SaaS business means two options:

💰 Pay cash up front, or

📉 Ask for a discount.

But the real pros know: the structure is where the magic happens.

Creative deal terms let you:

• Reduce risk

• Align incentives

• Win deals without overpaying

Here are a few of my favorite structures that have helped me land better deals.. sometimes even when I wasn’t the highest bidder.

💸 1. Revenue-Share Earn-Outs

Use when: You believe in growth potential, but the current MRR is shaky or inconsistent.

Structure:

• Pay a small amount upfront

• The rest comes as a % of future revenue (e.g. 20% of gross for 18 months)

Why it works:

• Reduces your risk

• Keeps the seller incentivized to ensure a smooth transition

• Works great for under-monetized or neglected products

✅ Bonus: If the product stalls, you owe less.

📈 2. Seller Financing with Performance Bonuses

Use when: The seller wants a high valuation, but you want to tie that to actual results.

Structure:

• 30–50% paid upfront

• 30–40% paid over time (0–12% interest)

• Bonus kicker (e.g. $25K extra if MRR hits $15K within 12 months)

Why it works:

• You limit downside

• They share the risk

• The bonus feels like a win for the seller, even if they gave on price

⚠️ 3. Churn-Based Holdbacks

Use when: There’s customer concentration or unclear retention.

Structure:

• Pay 80–90% upfront

• Hold back 10–20% for 3–6 months, tied to churn rate staying below X%

Why it works:

• Protects you from post-acquisition surprise churn

• Forces seller to be transparent about customer behavior

• Builds trust

📉 Especially helpful if customers were acquired through deals, AppSumo, or communities.

🧩 4. Hybrid Equity Rolls

Use when: The founder wants to stay involved or believes in upside.

Structure:

• Pay part in cash

• Roll 10–30% of equity into your holdco or a joint venture

Why it works:

• You get alignment without hiring them

• They stay motivated (or advisory) without full control

• Great for technical founders who don’t want to run the business anymore

🪜 5. Step-Up Pricing

Use when: The seller wants $X but the business doesn’t justify it, yet.

Structure:

• $Y upfront (what you think it’s worth)

• $Z added after specific milestones (e.g. “if revenue stays at $10K MRR for 6 months, we add $30K to the price”)

Why it works:

• Avoids overpaying today

• Gives seller a path to their number

• Keeps everyone focused on maintaining performance

🧾 6. Exclude Unrenewed Annual Pre-Pays (with Earn-Outs)

Use when: The seller’s revenue includes a chunk of annual pre-pays, but you don’t know which will renew.

Structure:

• Exclude unrenewed annual pre-pays from valuation

• If they renew, you pay the seller via a revenue-based earn-out (e.g. 100% of that renewal paid back over time)

Why it works:

• You don’t pay today for customers who may churn tomorrow

• The seller still gets paid if the customer sticks

• Encourages transparency in how those annual deals were acquired

📉 Especially important when annual pre-pays make up 20%+ of revenue.

Creative structures aren’t “tricks”, they’re tools.

They help you craft fairer, safer, and often more attractive deals for both sides.

If you’re only negotiating price, you’re playing checkers.

Structure is where the chess happens.