The argument runs like this. A seller knows things a buyer cannot verify: the real state of the sales pipeline, whether the key customer is renewing, which people actually hold the relationships. Where that gap is wide, the parties bridge it with structure rather than price. Seller financing and earnouts both work as signals, because a seller who accepts payment contingent on the future is staking their own money on the story they just told. Jansen finds both become more common precisely as information asymmetry rises.
The finding an owner should act on is what reduces it. Financial statement audits of the target attenuate the effect, which means an audited company is asked for less contingent structure, because the buyer no longer has to price the fog. Seller-financed transactions in the data also close faster and at higher prices, reducing the private firm discount. Read together, that is the empirical case for the unglamorous preparation work the Institute keeps recommending: clean, independently examined financials are not hygiene, they are pricing.
The industry detail is worth carrying too. Construction businesses, where profitability depends on the pipeline of fixed-price bids that only the owner can really see, are markedly more likely to involve seller financing. Restaurants and hotels, with tangible assets and cash flows that predict themselves, are markedly less likely. If your business looks more like the first, expect the structure and prepare for it.
Set this against the earnouts study also on this shelf, which examines what earnouts do to the parties once signed. Jansen explains why the structure gets used and finds a benefit to the seller in speed and price; the earnouts literature is considerably more sober about how often the contingent portion actually pays out. Both are true, and an owner should hear both before agreeing to one.