SERIES: GETTING YOUR AGENCY READY TO SELL YOUR BUSINESS | PART 3
When most founders imagine selling their business, they picture one thing: a large check. The bigger the number, the better the deal.
Nicole Pereira has made three exits. Her view is more nuanced and more useful for anyone going through this for the first time.
The headline number matters. But how the money moves, when it moves, and what you actually keep after taxes can matter just as much. Two deals at the same price can produce very different real outcomes depending on how they're structured. This is what first-time sellers most often get wrong.
The Headline Number Isn't the Whole Story
"Most people just want their big chunk of change, but then they realize the taxes will decimate it."
A large upfront payment sounds ideal until you realize it pushes all of that income into a single tax year, creating a bill that takes a significant portion of it. A lower number received over time, with interest, can net you more in practice. Structure is where savvy sellers make or lose money, and it's the part of the deal most first-timers don't think about until it's too late.
The First Decision: Asset Sale or Merger and Why It's Not a Close Call
Before thinking about how money is paid, there's a more fundamental question: what exactly is changing hands?
A merger means two companies combine into one, and the surviving entity absorbs everything from both — including tax problems, legal history, or hidden liabilities you had no idea existed. You don't get to choose what you inherit.
"Never merge… you're inviting them to see and judge and be a part of all your history… It is almost always cleaner to just do an asset sale."
Nicole's own merger ended in court. A disagreement surfaced between partners over decisions made before the deal. These decisions would never have been anyone else's problem if both sides had done an asset sale instead. The legal dissolution that followed cost time, money, and stress that none of it needed to cost.
An asset sale is the cleaner path where both parties form a new company. The assets — client relationships, contracts, the right to hire the existing staff — transfer into it fresh. Neither side inherits the other's history. It takes more work upfront, but it protects both parties from surprises neither saw coming.
How Most Deals Are Actually Paid Out
First-time sellers often assume a sale is simple: agree on a price, sign papers, receive a check. In practice, most small agency deals are structured across three payment layers:
Upfront payment — the amount paid at closing. This is what sellers focus on most, but it's rarely the whole picture.
Milestone payment — a payment triggered when the business hits an agreed target at a specific future date, such as maintaining revenue levels 12 months after closing.
Earn-out — a final payment tied to the ongoing performance of the business after the sale. Think of it as a performance bonus paid to the seller only if the business delivers what was promised.
"The earn out is the performance bonus… it ensures the buyer isn't buying a dud."
Earn-outs protect buyers from overpaying for something that falls apart after the seller leaves. They also give sellers a financial reason to stay engaged through the transition as an employee, advisor, or referral partner. Nicole notes that the earn-out structure keeps the seller close enough to the business to actually influence whether those milestones get hit.
How to Keep More of What You Make: Tax Strategy
This is where most first-time sellers leave significant money on the table — not because they made bad deals, but because they didn't think about taxes until after the deal was signed.
Long-term capital gains work in your favor.
If you've owned your business for more than two years, profits from the sale are typically taxed at a long-term capital gains rate — Nicole estimates around 15% — rather than as regular income, which is taxed much higher.
Spreading payments over time reduces your annual tax bill.
Receiving the full amount in a single year pushes all of it into the highest possible tax bracket for that year. Spreading the amount across three years, results in each payment being taxed at a lower rate. The total you receive doesn't change, but how much you keep after taxes does.
Geography matters more than most founders realize.
Nicole moved from California to Florida before her buyout and saved an estimated 9–13% in state income taxes. On a large sale, that's a meaningful number. If you're already thinking about relocating, timing that move before a large payout is worth a serious conversation with a financial advisor.
Seller Financing — Becoming the Bank
Seller financing means instead of receiving all your money from a buyer's bank or at closing, you receive payments directly from the buyer over time and you charge them interest on what they owe you. In other words, you become the lender.
Nicole's take: most buyers would rather pay a seller 8–10% interest than deal with the restrictions that come with an SBA loan. And most sellers who have flexibility on timing come out ahead with seller financing because they're earning interest on the balance while also spreading their tax exposure across multiple years.
Her ideal exit scenario: seller financing stretched over 10 years with interest, combined with a referral partnership — collecting regular payments while staying loosely connected to the business she built, without being responsible for running it day to day.
Closing Thought
The structure of your deal determines your real outcome, not the headline number. Understand the difference between an asset sale and a merger. Know the three payment layers. Think about taxes before you think about price. The founders who optimize structure walk away with more than the ones who only focused on the number.
Up next in Part 4: The operational work that makes your business actually sellable — and how to build the deal room that changes who shows up to negotiate with you.
This four-part series is based on a conversation with Nicole Pereira, serial founder and three-time agency seller.
