Press

An “earnout” is an acquisition payment mechanism where a portion of the purchase price of the selling company will only be paid by the Acquirer if the Seller attains agreed-upon performance goals after the closing.

Well-structured earnouts allow growing companies to increase their sales price and incentivize the Seller’s management team to stay with the Acquirer after the closing of a transaction. By contrast, poorly structured earnouts reduce the Seller’s value to the Acquirer, demotivate management, and result in litigation.

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