In one-third of all acquisition transactions, the seller finances part of the purchase price themselves through an earn-out and a subordinated loan. In addition, buyers and investors are increasingly stipulating conditions precedent that allow them to call off a deal at the last minute.
These are the key findings of Deal Terms 2026, the annual study by the acquisition platform Brookz on the terms of purchase agreements in SME transactions. This year marked the fourth edition of the study. A total of 264 M&A attorneys participated, who collectively advised on 958 transactions during the period from July 2025 through June 2026.
The proportion of deferred payments is increasing
In line with the trend of recent years, the number of transactions in which the seller co-finances part of the sale price continues to rise. The share of transactions involving a vendor loan rose to 30%, and the share of deferred payments based on future results (earn-outs) rose to 39%. However, the share of transactions involving a combination of a vendor loan and deferred payment, in particular, rose sharply compared to last year, increasing from 24% to 33%.
Furthermore, deferred payments are accounting for an increasingly large share of the total purchase price. In 45% of earn-outs and 32% of vendor loans, these payments now account for more than one-fifth of the total purchase price. Most earn-outs run for 6 to 24 months, and in more than half of all earn-outs (59%), EBITDA is the primary basis for settlement.
Less Deal Certainty
Currently, seven out of ten purchase agreements (70%) contain one or more conditions precedent, up from 65% in 2025. This means less deal certainty for the seller, as it gives buyers the option to still walk away from a deal during the transaction process. The due diligence review is the most common condition precedent (81%).
In addition, bank financing has quickly become a standard condition: rising from 49% in 2024 to 72% today. The MAC clause, which allows the buyer to back out in the event of a material deterioration in the business’s performance, is included in the conditions precedent in half of all cases (51%); in 2024, that figure was still 31%.
Buyers’ market strengthens
All these developments have led to the balance in the M&A market shifting increasingly in favor of buyers in recent years. According to 57% of the M&A attorneys surveyed, the past six months have been a buyer’s market. And two-thirds of all attorneys expect buyers to continue to hold the strongest negotiating position over the next six months.
According to Peter Rikhof, founder of Brookz, the growth of the combination of earn-outs and vendor loans is the logical consequence of that shift. “Prices in the SME acquisition market remain high. Buyers are willing to pay that price, but only if the seller shares in the risk. A seller who withholds a portion of the purchase price and ties it to future results demonstrates that they believe in their own businesses. For many deals, this has now become the key to reaching an agreement.”
