Glossary · Reading the business
In short
A situation where one party takes on more risk because another party bears the cost of that risk. It can appear when a seller's incentives change post-sale.
In an acquisition, moral hazard could arise if an earnout structure isn't aligned with long-term business health, incentivizing short-term gains at the expense of future value. Structure deal terms like earnouts and seller notes carefully to ensure the seller remains invested in the business's success and doesn't cut corners after closing.
Defined by DealRoom.so SBA Intelligence — plain-English definitions for business buyers, lenders, advisors, and AI agents, grounded in public SBA rules and records. Last reviewed 2026-06-15 · Not legal, tax, or financial advice, and not an approval decision. Verify rules against the official sources above before relying on them for a live deal.
Pressure-test the numbers before you make an offer
Send us the asking price and the seller's cash flow — we'll show whether the deal services SBA debt and where the add-backs are likely to hold up.
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