Deal Structures & Types: What Every Seller Needs to Know

An acquisition where the primary goal is acquiring the target company's team rather than its products, technology, or revenue. The acqui-hire price is essentially a talent premium — paying more than the business's standalone value to bring in a skilled team without competing for each hire individually. Most common in tech M&A where engineering talent is scarce. The acquired company often winds down post-close; key employees receive retention packages. Usually structured as an asset purchase of IP and employment agreements.

An acquisition is the purchase of one company by another. The term covers asset sales, stock sales, and mergers — the broadest umbrella for M&A transactions.

A purchase made by an existing PE-backed platform company to add revenue, customers, or capabilities — synonymous with bolt-on and tuck-in acquisition. Add-ons are acquired at lower multiples than platforms and integrated to create combined scale. See full treatment at [Bolt-on Acquisition](#bolt-on-acquisition).

A transaction in which the buyer purchases specific assets and assumes specific liabilities of a business, while the seller retains the legal entity — contrast with a stock sale, where the entity itself changes hands.

A smaller acquisition added to an existing platform company, typically for capabilities, geographic reach, or customer expansion — a standard building block of private equity roll-up strategies.

Bust-up is a deal structure used in M&A transactions, defining how a transaction is legally organized between buyer and seller.

A transaction in which a parent company sells a specific division, product line, or subsidiary rather than the entire business — structurally complex because the divested unit typically shares services, systems, and resources with the parent.

Acquisition of financially distressed companies — through bankruptcy (363 sales, plan of reorganization), out-of-court debt restructuring, or direct purchase from a company under severe financial stress. Distressed deals offer discounted acquisition prices but come with significant complexity: compressed timelines, limited diligence, litigation risk, and uncertain closing. Distressed buyers are specialists who understand the legal mechanics of bankruptcy, intercreditor dynamics, and post-acquisition restructuring.

The sale by a company of a subsidiary, business unit, product line, or other asset to a third party. Divestitures are driven by: portfolio rationalization (selling non-core assets), capital raising, regulatory requirements (antitrust mandated divestitures), strategic refocus, or activist investor pressure. From the buyer's perspective, divestitures are often undervalued carve-outs where motivated sellers create attractive pricing. From the seller's perspective, divestitures require careful separation planning and Transition Services Agreements (TSAs).

A staged acquisition where the buyer acquires a partial stake initially and earns the right to acquire additional ownership by meeting defined performance milestones or investment thresholds. Less common in traditional M&A than in mining/resources and joint ventures. In SMB contexts, earn-ins occasionally appear when buyers want to acquire control over time (buying 51% now, earning additional 24% over 3 years) to manage risk. Sellers prefer earn-ins when they want to maintain some control during transition or believe the business will grow to justify a higher eventual price.

A qualified retirement plan that buys company stock from the owner and holds it for the benefit of employees — a tax-advantaged exit structure that transfers ownership to the workforce while providing liquidity to the seller.

A corporate structure where a holding company (holdco) sits above the operating company (opco) — the typical organizational structure for PE-backed acquisitions. The PE fund acquires the holdco (or a new acquisition vehicle), which in turn owns the operating business. Benefits: liability isolation between entities, flexibility for future bolt-on acquisitions under the same holdco, tax planning flexibility, and clean separation of financing (at holdco level) from operations (at opco level).

Acquiring a direct competitor in the same industry and market segment — expanding market share, eliminating competition, and capturing scale benefits. Horizontal integration is the most common strategic rationale for large M&A in fragmented industries. Benefits: revenue synergies (customer cross-sell), cost synergies (eliminating duplicate overhead), pricing power, market position. Risk: antitrust scrutiny when it significantly reduces competition in a defined market.

A business entity formed and jointly owned by two parties for a specific purpose — combining resources, capabilities, or market access without a full acquisition. Joint ventures are less common in SMB M&A than full acquisitions but appear in: market entry (two parties entering a new geography together), technology commercialization (company + research institution), regulated industries where foreign ownership is limited, and situations where neither party wants to acquire the other.

An acquisition where a significant portion of the purchase price is financed with debt, typically secured by the acquired business's assets and cash flow — the foundational private equity deal structure.

A transaction in which the existing management team of a company acquires the business from the current owner — typically with financial backing from PE or other equity investors plus debt financing.

A transaction in which two companies combine into one legal entity by operation of law — rather than one buying assets or stock of the other — with shareholders of both receiving stock or cash in the surviving entity.

The foundational company in a private equity roll-up or buy-and-build strategy — evaluated as a standalone business that will serve as the platform for future bolt-on acquisitions in the same industry.

A transaction that restructures a company's ownership and capital structure — often allowing existing owners to take partial liquidity while remaining invested — common in PE minority investments and later-stage hold periods.

A transaction structure where the seller retains or acquires ownership in the post-close business — typically 5-25% of the new equity — continuing participation in upside alongside the new owner. Essentially synonymous with "equity rollover."

An investment strategy that consolidates multiple smaller businesses into one larger platform — typical in fragmented industries where scale creates value through multiple arbitrage, cost synergies, and organizational depth.

A sale-leaseback sells owned real estate and simultaneously leases it back — extracting real estate capital while maintaining operational continuity. Can be part of M&A structure.

A two-column financial table showing where the money to fund an acquisition comes from (Sources: debt, equity, seller note) and exactly where it goes (Uses: purchase price, transaction fees, working capital reserve, closing costs).

A shell company that raises capital through an IPO specifically to acquire a private business — taking the target public through the combination (a "de-SPAC" transaction) rather than a traditional IPO.

A transaction in which the buyer purchases the stock (or equity interests) of the target company, acquiring the entity itself along with all its assets and liabilities — contrast with an asset sale.

Toehold Acquisition is a deal structure used in M&A transactions, defining how a transaction is legally organized between buyer and seller.

Trade Sale is a deal structure used in M&A transactions, defining how a transaction is legally organized between buyer and seller.

A small acquisition "tucked into" an existing platform business — typically smaller than a bolt-on, with the target fully absorbed operationally and often losing its brand identity. Tuck-ins are acquired for their customers, revenue, or geographic coverage rather than as independent operating units. Integration is immediate and complete. Pricing is often at the lowest multiples in a roll-up strategy due to small size and limited standalone value.

Acquiring a company in the supply chain — either a supplier (backward integration) or a customer/distributor (forward integration). Backward integration secures inputs, reduces supply risk, and potentially improves margins. Forward integration controls distribution, improves customer relationships, and captures margin from the distribution layer. Less common in SMB M&A than horizontal integration, but appearing in manufacturing and distribution consolidations.