How to Structure a Business Deal: An Operator's 7-Step Guide

What is deal structuring?

Deal structuring is the work of deciding how a transaction is built: what is being exchanged, how and when it is paid for, who controls what afterward, and who carries each risk if events go differently than planned.

I have worked through 191 deal files across 11 sectors, from real estate and software to healthcare and energy. Parties spend most of their energy on price, and most failures come from structure: a payment schedule nobody could meet, a governance gap nobody noticed, a risk nobody owned.

Price is what people argue about. Structure is what decides whether the deal is still standing in year two." Adnan Feroz

Deal structuring basics: the four things every structure divides

• Value: what the business, asset or contract is worth, and on what basis.
• Payment: cash, shares, deferred amounts, performance-linked amounts or a mix.
• Control: who decides what after signing, and which decisions need both sides.
• Risk: who absorbs the loss if a forecast, a permit, a customer or a counterparty does not perform.

Every clause in a term sheet moves one of these four. If you cannot say which, you do not yet understand the clause.

How to structure a deal: the 7 steps

1. Define objectives on both sides

Write down what you must have, what you would like and what you can give away, then do the same for the other side. Know your walk-away position. The Harvard Program on Negotiation calls this your BATNA, your best alternative to a negotiated agreement, which it describes in plain terms as "what you will do if you do not reach a deal". A structure that ignores the other side's must-haves will not get signed.

2. Agree how value is measured

Before you argue about the number, agree on the method: a multiple of earnings, asset value, discounted cash flow, comparable sales, or price per square foot in real estate. Agree the period, the accounts and the adjustments. Most valuation fights are really method fights.

3. Allocate risk to the party best placed to carry it

List every material risk: performance, regulatory approvals, key people, customer concentration, construction, currency and counterparty. Then assign each one. The tools are warranties, indemnities, conditions precedent, escrow and price adjustments. My rule is simple: the party who controls a risk should carry it.

4. Choose the consideration

Consideration is what gets paid and how. Options include cash at closing, deferred payments, shares in the buyer, seller financing, or an earnout, where part of the price is earned after closing based on performance. Earnouts are often used when buyer and seller disagree about future growth, and they are also a frequent source of disputes over how the business is run and how results are counted, as this overview of earnouts explains. Use them only with tight definitions.

5. Set governance

Decide who sits on the board, who manages day to day, and which decisions are reserved for unanimous or supermajority approval: new debt, new shareholders, sale of key assets, annual budgets and related-party contracts. Governance is where a minority party protects itself.

6. Build the protections

Confidentiality, non-circumvention, exclusivity periods, non-compete and non-solicit terms, termination rights, and a dispute-resolution clause that names the governing law and the forum.

7. Put it on paper in the right order

1. NCNDA and engagement letter before any introduction. This is Law II of my Laws of the Desk: engagement first.
2. Term sheet or letter of intent capturing the commercial deal, with a clear line between the clauses that bind now and the ones that do not.
3. Due diligence against a written list.
4. Definitive agreements drafted by qualified counsel in the jurisdiction where they will be enforced.
5. Closing against a checklist of conditions and signatures, with funds handled only by the appropriate licensed parties. Law III: I am a coordinator, never a custodian. I never hold client funds.

Deal structuring examples: which structure fits which situation

Structure	How it works	Best when	Watch for
Share purchase	Buyer acquires the company's shares, including its history	Licences, permits or contracts are hard to transfer	Inherited liabilities; needs strong warranties and indemnities
Asset purchase	Buyer selects specific assets and contracts	Buyer wants a clean start without past liabilities	Contract consents, staff transfers, re-licensing
Earnout	Part of the price is paid later on agreed performance	Seller's forecast is higher than buyer's	Metric definitions; who runs the business during the earnout
Seller financing	Seller lends part of the price, repaid over time	Buyer is short of cash at closing and seller believes in the business	Security, default terms, ranking behind bank debt
Joint venture	Parties combine resources in a new company or by contract	Neither side can or should do it alone	Deadlock, exit, IP ownership
Strategic alliance or licence	Parties cooperate without shared ownership	Testing a partnership before committing capital	Who owns the customer; renewal and termination
Exclusive mandate	Owner appoints one party to sell, represent or negotiate for a set term	Owner wants one accountable lead and one market message	Scope, term, milestones, reporting
Revenue share	Payments tied to a percentage of revenue	Value depends on sales the other side generates	Revenue definition, audit rights, caps

For the two structures people ask me about most, see my guides on how to structure a joint venture and how to structure a deal with an investor.

Worked examples from my desk

Example 1: an exclusive, full-building sales mandate

In 2026, Adnan Feroz Properties L.L.C. secured a USD 1B exclusive sales mandate for two Dubai towers, one of 80+ storeys and one of 50 storeys. An exclusive mandate is a structure decision before it is a sales decision. The questions that matter are scope (which inventory, which markets), term, what each side delivers, how performance is reported, and what happens if either side underperforms. Clear written answers are what let an owner hand one party a whole building. See the mandate.

Example 2: a consortium agreement for an energy project

AERC, the Alternative Energy Resource Consortium in Dubai, is a waste-to-energy project of about USD 500M in value, designed for 7,500 tonnes a day. I am its founder and a Board Director. A consortium is a contractual joint venture: each member brings a capability, and the agreement defines roles, decision rights and how value is shared. The consortium agreements are signed; funding and launch are pending. That order is deliberate: funders read the structure first. See AERC.

Example 3: a hypothetical acquisition with a valuation gap

To show the mechanics, take a hypothetical. A founder wants USD 10M for a services business; the buyer's model says USD 7M. A structure could pay USD 6M at closing, hold USD 1M in escrow for 18 months against warranty claims, and pay up to USD 3M as an earnout on audited gross profit over two years. The founder reaches USD 10M only if the forecast proves right. These figures are illustrative, not from a client file.

Common mistakes when structuring a business deal

1. Negotiating price before agreeing on the valuation method.
2. Making introductions before an NCNDA and engagement letter are signed.
3. Leaving reserved matters vague, so a minority partner has no real protection.
4. Using an earnout with a loosely defined metric.
5. Ignoring the exit: no buy-sell mechanism, no drag-along or tag-along terms, no deadlock route.
6. Letting the timeline drift. My 90/90 Method sets 90 days to a decision and 90 days to execution.
7. Skipping qualified counsel in the jurisdiction where the agreement will be enforced.

A term sheet is a map of who carries which risk. If you cannot read the map, you are the one carrying it." Adnan Feroz

Proof: where this method comes from

I am a Canadian dealmaker and strategic board advisor based in Dubai, working across the US, Canada, the UAE, India and Africa. This method comes from live files: 14+ years in Toronto real estate with USD 300M in personal sales (2010–2024), the USD 1B exclusive sales mandate, a written global mandate (2025–2027) to represent and negotiate for Abdulla Bin Mujren Investment Group (ABMIG), a Dubai holding group of 14 companies, the AERC consortium, and USD 30M of signed software deals as Head of Alliances and Growth at Galaxy Weblinks. The full record is on my projects page and about page.

The complete framework is the subject of my new book, The Deal Architect: The 90/90 Strategy to Structure, Negotiate & Close Your First $100 Million Deal, launching on Amazon on 26 November 2026. If you have a live file that needs a structure now, my deal structuring practice works one-on-one with founders, owners and boards.

Strategic advisory and introductions only. Not investment, legal or tax advice, and not an offer of securities. Regulated activities are handled by appropriately licensed firms.

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Frequently asked questions

How do you structure a business deal?

Work through seven decisions in order: each side's objectives, how value is measured, who carries each risk, the form of consideration, governance, protections, and the paperwork sequence. Start with an NCNDA and engagement letter, move to a term sheet, run due diligence, then sign definitive agreements drafted by qualified counsel. Price matters, but structure decides whether the deal holds.

What is deal structuring?

Deal structuring is deciding how a transaction is built: what is exchanged, how and when it is paid, who controls what afterward, and who carries each risk. It covers choices such as share or asset purchase, cash or deferred payment, earnouts, joint ventures, alliances and exclusive mandates. Two deals at the same price can carry very different risk once you read the structure.

What are some deal structuring examples?

Common examples include a share purchase, an asset purchase, an earnout where part of the price depends on future performance, seller financing, a joint venture, a strategic alliance or licence, an exclusive sales or representation mandate, and a revenue share. Each fits a different situation. An earnout bridges a valuation gap, an asset purchase limits inherited liabilities, and a joint venture combines capabilities.

What should be in a term sheet for a business deal?

A term sheet should cover the parties, what is being bought or contributed, price and valuation basis, form and timing of payment, key conditions, due diligence scope, governance and reserved matters, exclusivity and confidentiality, termination, and governing law. It should state clearly which clauses bind now and which do not. Treat it as a map of the deal, not the final contract.

How long does it take to structure and close a deal?

It depends on size, sector and approvals, but drift is the main risk. I use the 90/90 Method: 90 days to reach a decision on whether and how the deal proceeds, then 90 days to execute it. Fixed decision dates keep both sides accountable and stop a good deal from dying of fatigue while everyone waits for the next draft.

Do I need a lawyer to structure a business deal?

Yes, for the definitive agreements. A strategic advisor helps you design the commercial structure, prepare the negotiation and keep the process moving, but contracts should be drafted and reviewed by qualified counsel in the jurisdiction where they will be enforced. Tax structuring needs a licensed tax advisor. My role is strategic advisory and introductions only, never legal or tax advice.

Get the full framework on launch day

The Deal Architect launches on Amazon on 26 November 2026. Register now for the launch-day link, or bring a live file to my deal structuring practice.

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Sources

1. Harvard Program on Negotiation: What is BATNA? How to Find Your Best Alternative to a Negotiated Agreement
2. Earnout (overview of earnouts in M&A)