I am working on a deal where I would purchase partial ownership in a company and then after 3 years have an option to purchase the remainder of the business under terms negotiated today. The business was truly off market; growing steadily for years but the owner recognizes father time is coming. I would like to price the option with contingency on growth of adjusted EBITA or SDE. I think the company is currently worth roughly 3 million (4.5 to 5 times EBITA assuming 150k operator salary), and the seller is looking for 4 million for the future option. His price target could be totally reasonable if the growth is solid between now and the option strike date in 3 years. What metrics have you seen or used in contingent\forgivable notes? Revenue is the easiest to measure, but what if the owner simply reduces the margin to drive sales or pile on the expenses to get there? Has anyone found a good clean way to write in SDE or some sort of EBITA equivalent target into a seller note? Has anyone used gross profit and felt confident the performance was real and not buried by expenses further down the income statement. Is there a better way to define this growth in financial terms that both parties in a deal understand and feel accountable to?