Dealmaking in a high-rate market.

Expensive capital does not stop deals from happening. It changes who captures the value in them, and it moves that value out of the purchase price and into the structure. Buyers who are still negotiating as though the headline number is the deal are consistently losing to buyers who have worked out that the number is now the least interesting term on the page.

The first place value migrates is the earn-out. When a seller's expectations were set in a cheaper-money era and a buyer's model is built on today's cost of capital, the gap is often too wide to split. An earn-out bridges it, but only if the metric is one the buyer cannot manipulate and the seller can still influence after closing. Revenue-based earn-outs with a defined operating covenant survive; EBITDA-based earn-outs without one generate litigation.

The second is the treatment of debt itself. Assumed facilities, seller notes and deferred consideration have all come back into ordinary use, and each carries a different tax and security profile. A seller note that is genuinely subordinated is a different instrument from one that merely says it is, and the difference shows up the first time the buyer's senior lender is asked to consent to anything.

The third is closing risk. In a market where financing can move against a buyer between signing and completion, the allocation of that risk becomes the real negotiation. Sellers should be asking for a reverse break fee that is large enough to hurt. Buyers should be resisting conditions they cannot control. Both should be shortening the gap.