2 min read. What is an earn-out? An earn-out is a contingent portion of the purchase price of an acquisition determined post-closing based on the target company’s performance against certain contractually defined criteria or benchmarks. Typically, payments to the seller would be structured so that part of the purchase price will be paid at closing, followed by a further payment or series of payments depending on the profits made by the target company. Why do parties utilize earn-outs? It is an effective negotiating tool when differing perspectives on value or future prospects and profitability of the target company exist. It […]
Daily Archives: July 23, 2021
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