When PE offers 7× for your HVAC company, that's not all cash at close.

When private equity offers 7x for your $800K residential HVAC company, that 7x is not all cash at close.

Typical LOI structure on a 7× offer.

• 4× — Cash at close (≈ 50–60% of total)
• 2× — Rolled equity (≈ 20–30% of total)
• 1× — Cash earn-out (≈ 10–20% of total)

The cash-at-close number is the money that hits your bank account on day one. The rolled equity is a continuing investment in the post-close business at terms the buyer largely controls. The earn-out is contingent on the business hitting agreed performance targets — typically EBITDA — over a 12-to-36-month period after close.

Questions to ask before signing the LOI.

The structure components — particularly the rolled equity and earn-out — collectively make up roughly half the purchase price in a typical structure like the one above. The questions you should have crisp answers to before signing:

• Rolled equity: What's the valuation methodology at the next exit event? What governance rights come with the rollover? Tag-along and drag-along provisions? Anti-dilution protection? Information rights? Liquidity windows?
• Earn-out: Exactly how is the performance metric calculated? Who controls the operational decisions that affect it? What add-backs are credited? Are there caps or floors? What happens if the buyer makes a strategic decision (acquisition, divestiture, capital reallocation) that affects your ability to hit it?
• Cash at close: Net of what? Working capital target, indemnification escrows, transaction expenses, and management transaction bonuses all come out of the headline cash figure.

The takeaway.

A 7x offer at "all cash at close" and a 7x offer structured as 4x/2x/1x are not the same offer. They can be 30–40% apart in real economic value depending on what happens with the rolled equity and earn-out over the hold period. The structure conversation deserves at least as much attention as the multiple conversation.