LOI and earn-out glossary for creator deals

LOI (letter of intent): A short, mostly non-binding document that sets out price, structure, timing and exclusivity before the full purchase agreement is drafted. The binding parts are usually exclusivity, confidentiality and expenses. Most of the economics you will live with are decided here, so negotiate the structure at the LOI, not later.
Exclusivity (no-shop): A period, often written into the LOI, during which you agree not to talk to other buyers. Shorter is better for the seller; ask what happens if the buyer misses its own deadlines.
SDE (seller's discretionary earnings): Profit plus one working owner's pay plus documented one-time costs. The standard earnings measure for small owner-run businesses, and the basis for the Flippa and broker multiples on this site.
EBITDA: Earnings before interest, taxes, depreciation and amortization. Larger creator companies with management teams are usually priced on EBITDA rather than SDE. EBITDA multiples look higher than SDE multiples partly because EBITDA is a smaller number for the same business.
Add-backs: Expenses added back to profit because a new owner would not incur them: the founder's salary, a one-off studio build, a lawsuit. Every add-back needs a document behind it.
Headline price: The largest number in the offer, assuming every contingent payment is earned in full. Compare offers on cash at close and on risk-adjusted value, not on headline.
Cash at close: What is wired on the closing date, before escrow or holdback. The part of the price you control.
Earn-out: Payments made after closing only if the business hits agreed targets, usually revenue or EBITDA, over one to three years or longer. Earn-outs bridge disagreements on value. The details that matter: which metric, who controls the budget, how disputes are resolved, and what happens if the buyer integrates or shuts down the unit.
Contingent consideration: The accounting term for earn-outs and other payments that depend on future events. Public buyers disclose the maximum amount, which is where the contingent shares on the offer checker come from.
Seller note: Part of the price paid later as a loan from you to the buyer. Check interest, maturity, security and whether it is subordinated to the buyer's bank debt.
Equity rollover / stock consideration: Part of the price paid in the buyer's shares. You keep exposure to the business and take on the buyer's risk. Ask for the last priced round, liquidation preferences and lock-up.
Escrow / holdback: A slice of the price held back for a period, commonly to cover indemnity claims. It is real money you may not see for a year or more.
Working capital peg: A target level of working capital the business must deliver at close. Unfulfilled sponsor obligations that were already paid for usually count against you here.
Reps and warranties: Statements you make about the business (the numbers are accurate, you own the IP). If they prove false, the buyer can claim against escrow or you.
Key-person clause: A term that ties payments or the deal itself to specific people staying on. In creator deals, the key person is often the creator.
Non-compete / non-solicit: Limits on what you can launch or who you can hire after the sale. Read the scope, geography and length carefully if you plan to keep making content.
Asset sale vs stock sale: In an asset sale the buyer picks specific assets (channels, IP, contracts); in a stock sale it buys the entity, liabilities included. Tax treatment differs; ask your adviser.
Catalog financing: Capital advanced against the future ad revenue of an existing video library, repaid from that revenue. Not a sale of the channel, but it creates a claim a buyer will want to see.

The terms in a creator-business sale