Cash at closing, an earnout or buyer stock: which offer for your IT or cybersecurity services firm is worth more?
Quick answer, Nov 9, 2026As of 9 November 2026, a headline price is three different promises. Cash at closing is money. A net-asset adjustment moves after you sign. An earnout or buyer stock pays only if something later happens. Two filed IT services deals show how far apart the three can sit.
An offer arrives as one number, and it is not one thing. Part of it moves on the closing date, part is a true-up the buyer still runs afterwards, and part is a promise that pays only if the next two years go a particular way. Two acquisitions of IT and cybersecurity services businesses on file in 2026 show how far those parts separate.
What each part of the price actually is
| What you are deciding | Cash at closing | The net-asset adjustment | An earnout, or buyer stock |
|---|---|---|---|
| What it is | money wired on the closing date | a true-up once the closing figures are agreed: ePlus recorded "an estimated $1.5 million due to the sellers based on adjustments to a determination of the total net assets at closing" (ePlus Form 10-Q, quarter ended 30 September 2026, Note 15, "Business Combinations") | a payment that depends on later performance, or shares in place of cash |
| What decides it | the signed agreement | the closing accounts, and whoever reviews them | thresholds written into the agreement: one 2025 deal set an earnout "based on the Company's achievement of certain cumulative average adjusted EBITDA thresholds for the 2025 and 2026 fiscal years" (Intelligent Protection Management Form 10-Q, quarter ended 30 June 2026, Note 3, "The Acquisition") |
| How common it is | every deal | "present in more than 90% of transactions today, up from 50% just a decade ago" (SRS Acquiom, 2026 Working Capital Purchase Price Adjustment Study) | "24% of private-target (non-life sciences) deals in 2025 report an earnout, up from 19% in 2014" (SRS Acquiom, M&A Earnout and Milestone Trends) |
Every figure was read on the filing or page it links to on 9 November 2026.
Two filed deals, side by side
All cash, no earnout. On 21 August 2026 a subsidiary of ePlus acquired certain assets and liabilities of Daymark Solutions, described in the filing as "an IT solutions and professional services provider focused on architecting, implementing, and supporting complex hybrid cloud, cybersecurity, compliance, and modern data center environments". Consideration was $17.4 million: $15.9 million paid in cash at closing, plus the estimated $1.5 million net-asset adjustment. Of $7.5 million in identified intangible assets, $6.5 million was customer relationships with a ten-year useful life, and $9.2 million of goodwill was "attributable to the acquired assembled workforce and expected synergies" (Note 15).
Cash, stock and an earnout that went to nothing. On 2 January 2025 Paltalk, since renamed Intelligent Protection Management Corp, acquired Newtek Technology Solutions from NewtekOne, its sole stockholder. The purchase price was recorded at $12,904,000: $4,000,000 in cash, 4,000,000 shares of a non-voting class carried at a fair value of $8,200,000, and an earnout of "up to $5,000,000" carried at a fair value of $704,000 on the closing date. By 31 December 2025 the buyer "re-measured the fair value by adjusting this amount (as permitted during the measurement period) to zero" (Note 2, "Summary of Significant Accounting Policies — Fair Value Measurements").
Read as headlines, those are a $17.4 million deal and a deal worth up to $17.2 million if the earnout paid in full. Read as money on the day, they are $15.9 million and $4 million.
What to do with your own offer
Compare cash at closing first, then price everything else separately. Three things decide the rest.
- The adjustment is a price term, not an accounting formality. It is in more than nine deals in ten, so the working-capital definition and who reviews the closing accounts deserve the attention most owners spend on the multiple.
- Shares are not cash until they can be sold. The non-voting shares above convert into common stock only "upon the occurrence of certain qualifying transfers" by the seller. Ask what turns the paper into money, and when.
- The earnout is written before you lose control of what it measures. Once the buyer owns the business it decides the spending, pricing and reporting the EBITDA threshold runs off. One buyer wrote that earnout to zero inside a year.
Money can also move backwards after close: "Nearly three out of ten private M&A deals experience an indemnification claim", and the median resolution time for fully litigated or arbitrated claims is 15 months (SRS Acquiom, 2026 M&A Earnouts & Claims Study).
Which buyer is at the table decides how much of this you ever see: who buys MSPs and cybersecurity services firms, and for managed security and compliance, selling an MSSP or GRC firm. Whether a sale is the right door at all is in loan, recap or sale and unitranche, a senior bank loan or a sale.
Where Frontier Desk fits
In the Cybernetic Age the work a firm's software already does changes both the price a buyer offers and the shape it offers it in, because a buyer planning that change itself would rather defer the price than pay for it today (how AI changes what a services firm is worth). Frontier Desk is the owner's advisor on who would buy or lend, what each checks first, and what is missing before any of them look. The exit roadmap takes two to four weeks and ends with a 90-day plan and a re-check at day 90. Start with a free first look, or see who is buying on markets.
Questions
Should I take a lower all-cash price over a higher one with an earnout? That is a terms question, not a rule. What the record supports is the arithmetic: across all deals with an earnout, "closer to one out of five dollars gets paid" (SRS Acquiom). Price the earnout below its face value before you compare the two offers.
Were these sellers companies my size? UNKNOWN. Neither filing states the target's headcount, and one target was carved out of a public company rather than sold by an owner-operator. They are useful because the terms are on the public record, not because the companies match yours.
Is an uncapped earnout better? It removes the ceiling and nothing else. The earnout above was capped at $5,000,000 and still paid nothing: what bound it was the measurement, not the maximum. How wide that gap runs across a serial buyer's deals is in the insurance agency consolidation outlook, where one listed buyer's 2026 acquisitions imply 4.8 times annualised revenue acquired on cash paid at closing and 6.2 times at maximum earn-out. An uncapped earnout is still worth whatever the measurement period produces.